I think I know what's causing the block.
Don't use "Envelope" for the Package Size. Use "Large Envelope" or "Package (or think envelope)". The later is what I always use for book-fold boxes.
Danno
Edit: BTW, you might want to consider using 1st Class instead of Media. For light weight items, the 1st class rate might be cheaper and faster for under 8 ounces.