Most likely one of the merge fields is failing to merge, the two most common reasons in our experience are:
One or more of them have been partly deleted or over-typed and the user has tried to fix them by typing the missing bits back in - this does not work and leaves the merge field broken.
One or more of them are for a field that can contain a lot of text, such as the Notes tab in an applicant record - if a linked record contains too much text for the merge operation to handle, it will result in the same type of error.
Suggested client actions:
Carefully remove and re-insert (NOT re-type) all merge fields used in the template.
If that doesn't resolve it, remove any merge fields that might be pulling in more than a line or two of text. Re-add and test merge field by merge field until the culprit is found, then try to ascertain which record(s) a lot of text is being pulled from to populate that merge field. It may be necessary to either shorten the text in the offending record(s) or simply not use the merge field if the text cannot be shortened.