Apparently it’s not the correct syntax. The trailing colon instructs vDos to exclusively open the Windows "IT_1" device. And send bytes the DOS program outputs to the DOS LPT1 device instantly and unmodified to that Windows device. That colon option is mostly for communicating with serial devices, not being a printer. Though it can also be used as an alternative to the RAW option, bypassing vDos default to collect print jobs. Or ‘misused’ - eventually with a file name - to ensure only one instance of a DOS program is running.
In your situation “IT_1” will be an actual Windows printer driver. These don’t support/understand ASCII data streams as send by your DOS program and just give up at receiving the first byte. So you have to start with omitting that colon, then read the Printing.pdf document. The trailing colon option is only explicit mentioned as an ‘oddity’, so I wonder how you came to that.
Remove/comment that line in config.txt. The Windows printer selection dialog will then popup. Select one, if that produces the expected printer hard copy, no reason why not. Copy the selected printer (driver) to LPT1=SEL:"..." if you want it to be preselected.