if this is something like what you are experiencing, i'd call the factory and see if they can walk you through it. When the needle touches the vinyl to start to cut a letter, that is your plunge point. When it is finished cutting the letter though, and the start and end points are not lining up and leaving snags, it's more then likely your pulleys need tightened.
this is how my 10 year old ioline cut before i started (small of large, i always had a snag.... smaller letters were horrible). The kid that ran the equipment before said it was because it was old. After he left one day i decided to call ioline, told them the situation and sent in the pictures. The guy walked me right through everything. I just had to remove the side of the plotter to access the pulleys and tighten them ALL with a hex wrech. Then he had me turn it on full speed and do some test cuts with some secret ioline plotter button codes, been cutting like new ever since. (i tighten them every 3 months now)
these letters here are under 1"