I had a similar situation recently at a client's where AR Batch Listings would always go to the bypass tray (or manual tray). They are using a big multi-tray Toshiba printer. After many attempts in Adagio to fix the issue, a Toshiba Technician was able to resolve it:

A Toshiba technician has figured out that Adagio, like a few other third party software, was only seeing one (top) tray in the printer, which in our case was Ledger, instead of Letter size and that's why it was waiting for letter size papers to be fed in from bypass tray manually. Changing the top tray configuration to Letter size fixed the situation.