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For some time Microsoft users have been aware of a problem relating to the failure to fully propagate labels in Word's mail merge function, when used with a Tablet PC. e.g. If you insert an Address block in the first label position, and then tap Update all labels at step 4 of 6 in the Mail Merge wizard, only the first row and the last two labels on the last row will be updated with the AddressBlock field. The other labels will only have the Next Record field inserted.
This is addressed by Microsoft at https://support.microsoft.com/kb/898630/en-us .
However it now appears that with the introduction of Office 2007, the problem may be more widespread, as a user in the Word mail merge forum found that he experienced the same issue with a Dell Dimension DXP061 2.4GHZ Intel dual core, 4 GB RAM, running Vista Home Premium, & Office 2007.
To address this, until Microsoft creates a fix, fellow MVP Doug Robbins has come up with another of his handy macro solutions, which is posted below. This intercepts and replaces the in-built propagation tool.
For an in depth look at using mail merge with Word, see the following tutorials