FYI: I solved the envelope issue by buying another paper tray on that auction site (paid $110 new in box). If you load #10 envelopes in the first tray and set the paper type, then Word will automatically select that tray when printing envelopes. Depending on how much of an annoyance this is to you it may be well worth it.
This exact same problem is also driving me nuts, please let me know if you find out a way to solve this.
I have a new Xerox VersaLink B600 setup as a local printer and need to set the bypass tray to accept different size print jobs (i.e. print an statement for excel then print an envelope from word) without the user have to do anything except put the statement (5.5 x 8.5) or the envelope (NO 10) into the bypass tray and adjusting the paper width slides. We only print 8.5 x 11 paper from tray 2. The old HP printer we are replacing can do this because it takes the info from either excel or word and uses that info and prints after the put in the statement or envelope and adjust the paper width. Now they have to adjust the paper size and type (statement 5.5 x 8.5 or no 10 envelope)