You can adjust the DVD case spine width in the "Edit Dimensions" dialog of AudioLabel. The maximum spine width is 50.8mm (or 2 inches).
The spine width limit you are hitting has to do with the paper size. A spine width of 17.7mm is about the limit for Letter sized paper (there is not enough psychical room on the paper to print a larger spine). If you print on A4 paper size, you can get a maximum spine width of about 34mm. If you print on Legal, Ledger, or A3 paper size you can get the full 50.8mm.
I would recommend printing on A4 size paper, and adjusting the spine width to 28mm. You can select the A4 paper size the "Edit Dimensions" dialog.
Please let me know if you have any other questions.