Well, thanks to Ron Caudillo going over everything step by step, we got it solved!
It seems that the hobby video is not what we paper modelers want to follow.
The mistake I made was at the screen ready to import the image into the graph paper scaling canvas lookin' step, I needed to use a magic wand tool to erase the background.
Also windows, portholes, openings, etc... so we made a test cut and that fixed the blank square it was cutting out , to the individual parts as it could read them.
The really cool thing is that now for something like the Jupiter 2 from lost in space, I can make a silhouette on screen and then slip in some metallic faced paper and it will cut out the parts without printing the ink texture on them.
So it will be a real clean cut and sharp paper outside appearance.
I also plan to make those led light boxes now in black paper for the windows on his enlarge 1701!
I wont have to cut out the printed inked paper windows, just back it up with the stencil black paper pieces and make a light box like I originally wanted.
REAL PLEASED WITH IT!!!