We are using the Zebra 170XilllPlus printer for printing rolls of labels which they have some preprinted portions on them. However, after we printed the first label of a roll successfully the next and all other subsequent labels were misaligned and the printer showed a " paper out error ".

Extended two key means one of the buttons by the LCD are sticking and not releasing, you use the two key sequence to print a device configuration but if you hold in the buttons for too long r they are sticking that's when you get the extended two key error.

Change the font size in the label program you're using.

A very common issue I encounter weekly with a very simple solution most often. Please read this article. Zebra LP 2742 will not print after replacing roll

The new labels are probably not thermal labels. Test them by applying heat to the surface and see if they turn black. If they do not change, then they are thermal transfer labels and not direct thermal. Contact your label vendor and have them replaced.

Were the new labels thermal paper? Thermal printers need specially made paper to work right.

Have to callibrate the printer.
With printer ready
press Pause once.
press Pause for 3 seconds until
- The labels are fed (let 3 labels go through)
the Choose detection preprinted lmabels in the driver
Or
a message Transmissive is displayed.
Release he pause button.
Press on the pause button to feed 2 or 3 labels
Then select transmissive preprinted in the driver.
Else
Restart to change from transmissive to reflective if you use black mark.
Press pause to feed 2 labels
Choose relective preprinted or reflective manual in the driver

I assume by double tags you mean 2 labels across the roll.
You need to tell your software that the roll is 2 across.
If using the software that comes with the printer, Zebra designer.
Set your label width to twice the single label and copy the barcode so that you have 2 across the label, then print

Make sure you are using thermal paper roll and not regular label roll.

Ok, when you say continuous...do you mean it is a roll of label material that does not have gaps in between? If it has gaps...it is NOT a continuous label and you probably have the driver settings set as continuous feed and not gap as it should be....

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Did you switch your ribbon as well?