I have a report with two column, in the column I have a subreport, the report compile if the subreport only contain one element, otherwise I have a :
Subreport overflowed on a band that does not support overflow.
What PrintOrder (a property at report level) have you set? Horizontal or Vertical? Try to set it to "Horizontal" - also on both (main and subreport). When I remember right, I had some troubles some years ago with a similiar LablePrinter Layout that I've fixed with the printing direction.
By the way... I guess the compile is OK.... you mean, when FILLING the error appears, right?
hth + regards