I resolved Seiss’s issue in 5 minutes yesterday, then noticed the thread continued today.
FYI - here are the steps I went through, which may be useful for others who have a problem like this one (a tool which does not work properly in one file, but works in other files):
Since the label tool worked in other existing files and in a new file, but not this one, there was no problem with the workstation or library. The default settings for the label tool were the problem, in this project or when continued with “Use latest project settings”. Rather than try to troubleshoot the actual settings (which would have worked but I wasn't sure how complicated the troubleshooting would be), I suggested that Seiss eye-dropper a label on his floorplan to pick up some “good” settings.
He didn’t have any labels in the current project, so he opened up another project, copied a label, then went back to the problematic project, and pasted. Then he used the eyedropper.
At that point the label tool worked fine, except that it automatically put the same text down that was in the label that was eye-dropped. This was fixed easily by opening up the label tool default settings, and deleting the Default Text, so it was now blank.
Obviously, going straight for the Default Text in the default Label Settings was the direct fix; however the troubleshooting steps above may be useful in general for situations in which a tool works in one file but not in another.