Old fool keeps label in shape (7)
I believe the answer is:
octagon
'shape' is the definition.
(octagon is a kind of shape)
'old fool keeps label' is the wordplay.
'old' becomes 'o' (abbreviation as in OT - Old Testament).
'fool' becomes 'con' (I've seen this in another clue).
'keeps' is an insertion indicator (inserted letters are kept inside).
'label' becomes 'tag' (tag is a kind of label).
'con' going around 'tag' is 'ctagon'.
'o'+'ctagon'='OCTAGON'
'in' is the link.
(Other definitions for octagon that I've seen before include "Eight-sided figure" , "Eight-sided room" , "Shape of a square with the corners cut off" , "Figure of many sides" , "regular form" .)