To allow the Contour Cut effect to trace the outline of objects in a bitmap, make the background of the image transparent using the Make Transparent function. Otherwise, the effect will only trace the outside of the bitmap.
Using Contour Cut
Creating a Contour Cut or Cuts around Objects
Adjusting Contour Cut Using DesignCentral
Adjusting Contour Cut Using Control Points
Transforming Objects into a Cutting Line