I can print envelopes with LibreOffice 126.96.36.199 and Brother HL-5340D laser printer.
I use the paper envelopes for CD/DVD such as these ones
I don’t tell LO Writer nothing and it asks me nothing.
Instead I prepare the file for LO Drawing like this one:
Then I do what you do.
The printout is correct.
If you own such envelopes try to print one using my file. In the other case prepare a piece of paper 12.5×12.5 cm and print the text on it. It should go along the upper edge of the envelope.