You were right Jeff - the image I attached above was not good. I did it with PEP and saved it and then subsequently was opening it and trying to produce Gcode, but apparently it was not dithered properly. I did it again and now the Gcode looks better - still not perfect for impact engraving I think as it doesn't separate the Z moves from the X and Y, but I will try to engrave and see what a result I will get.
Do you know anyone who tried to use PEP with one of those engraving attachments? I understand that to use it this way, you have to use "variable feed rate" mode, but my question is what happens if you have a clear white colour on the picture - you can't have a high enough feedrate to not leave any marks on the workpiece...
Thanks,
Dan