PLEASE HELP! Setting Cut Lines in Illustrator

Hello Everyone,

So far I have looked at about 20 topics on this site, tried Googling, Youtubing, and reading Manuals and can't find a definitive answer on this subject.

-I recently purchased a Roland SP300V and Versaworks
-I am used to Photoshop but now have Illustrator CS4

I followed the instructions I recv'd on creating the CutContour swatch in Illustrator and that is done.

Now I have no clue on how to actually create the cut path around an image, or logo I bring into Illustrator.

I tried bringing in a logo I designed in Photoshop and it is converting the layers into a bunch of rectangles.

If anyone can help me out here or point me in the right direction I would really appreciate it.