Choose the edge you actually want to follow
For a reflective badge, the bright and dark patches inside the metal show lighting, not separate pieces of geometry. A transparent PNG isolates the badge from its surroundings. Tracing the alpha edge gives you the outer silhouette and the real openings without following reflections.
A black drawing on clean white paper is a different case. The brightness of the image can separate the shape from the background. Crop out shadows, ruler markings and surrounding text first. These marks can turn into extra contours if they are left in the image.
Keep the useful openings
Upload your source to Image to DXF and inspect the outline preview. Use automatic edge detection for a clean transparent PNG, and choose the edge mode manually if the outline follows the wrong boundary. Turn on internal holes when openings are part of the shape.
For a template that needs just one outside edge, omit the holes and check whether the image still contains disconnected pieces. A dot or loose accent can create a separate outline. Remove these parts from the source if they are not part of the intended drawing.
Set the width and measure after import
The width setting refers to the full image, including its blank margins. If an image is 1,000 pixels wide and the visible part uses only 800 pixels, an image width of 100 mm will make that part about 80 mm wide. Crop the source tightly if the visible outline should match the width you enter.
Open the DXF in the CAD application and measure between two known points. Confirm that the contours close and that internal holes are in the right positions. Zoom in on corners and curves to catch small zigzags introduced by a low-resolution source.
Review the drawing before cutting
A usable outline still needs review in the receiving workflow. Check the minimum feature size and which lines are intended to be cut. Tool offset, material allowances and operation order belong in the CAD or CAM setup. Keep a source image and an editable vector version so that a geometry correction does not require tracing from scratch.