EPSON XP-800 keeps going to "pause" help please!

Hi, we are running OS-X 10.6.8 on our desktop computer. Wifi is functioning well. XP-800 printer only a few months old and keeps going to "PRINTER PAUSED" message with green icon with two lines. When we hit resume printer it goes right back to pause. I am not sure this is a hardware issue, here's what I've done:

1. Checked wifi -- printout shows all PASS, correct network etc (yes I can print this report from the EPSON touchscreen on the printer).

2. Tried connecting via USB -- issue unresolved.

3. As mentioned above, printer will print from its touchscreen.

4. EPSON printer utility opened through the MAC shows printer "READY"

5. Test page prints from desktop EPSON printer utility (!!). Printout fine.

6. Uninstalled printer and reinstalled several times with computer restart.

7. Downloaded latest driver from apple support (8/8/13).

8. There is a message on the network report that reads, "a router/access point channel conflict has been detected." However, shouldn't the printer work on USB? Makes no sense. Also signal strength "excellent."

9. I did all the printer maintenance -- cleaned heads etc.

Any advice?? We really need to get this working.....thanks, M