You have to watch this amazing video in two parts for cutting a picture with the cricut and SCAL... http://www.youtube.com/watch?v=N5d-nDjs3bg
He does an excellent job. May help with some of the other questions raised with positioning...
I watched both episodes of the video and there are several techniques that I can use. I'll have to watch it several times to make notes.
If you want to learn how to cut an image out of a preprinted photo and you have some knowledge of Inkscape you'll learn alot.
Unfortunately the video is not crisp, jumps around and the narrator drifts on occasion into irrelevancy and does not provide salient facts along the way. BUT I'm going to try it and maybe condense it down to clear steps.
I've also been studying these and seeing what else can be done with this technique. Very interesting, indeed. Keep in mind that in order for this to work, your digital file must be cropped to a 3:2 ratio before sending it to Walmart. Otherwise it will get cropped in printing in order to fill the page, as most digital cameras use a 4:3 ratio.