I am having issues with printing booklet from InDesign directly, everything was woking fine until it stopped and attached is the photo how pages look a like when getting printed. I cant figure out which setting has changed and paper is getting printed only on half page. Paper size is 8.5 x 11
Have you tried producing your pages into a PDF and using Adobe Acrobat's booklet functions? They work very well.
Some folks have good luck with creating booklets from InDesign, others have issues. But most of the issues I've run across producing booklets have worked better with Adobe Acrobat. This link will connect you to a help page which will tell you more about printing booklets from Acrobat.