Step 1: Overview
1. Any raster format image (jpg, bmp) has to be very clean without any extraneous pixels or colors to process well
2. Colors - the software tries to make like colors the same and blend them all into one stitch section, or turn light colors into white which can be accidentally deleted when removing "background" color
3. Black is always treated as an outline area and by default the software will try to narrow black areas, or not be able to stitch the area at all
4. "options" don't appear to make much difference and satin vs. fill stitches can be applied haphazzardly
5. While making the images for this Instructable I found that my "new" computer could process images the old one couldn't (more processing power makes a world of difference). The Chinese image of the birds crashes on my old computer.
For best results you want to have a clean image in a vector format (for a good explanation of vector vs. raster files see this video by artexlabel http://www.youtube.com/watch?v=YurPdfuDj6M ). You can spend a lot of time cleaning up raster files (which I did initially) or go for a vector format image which will digitize better.
My 4D software only reads WMF vector files. I used Libre office to export to WMF - cause it is FREE! (http://www.libreoffice.org/), But the main thing is to have a graphics program that supports objects and can save or export to WMF.