Here is a link to Embroidery Library. Not only do they have wonderful designs but they have great instructions.
This will explain the basic applique technique for you.
I love machine applique. I have a couple of hundred designs if you ever need anything.
Hope this helps.
Jenni

Here is a link that might be useful: Applique

Marti - the machine stitches an outline for placement, then you place the applique fabric over the outline, then the machine stitches the outline again. You remove the hoop from the machine (but don't unhoop the fabric), trim the applique fabric close to the stitching, put the hoop back on and stitch the rest of the design. The satin stitch will cover up the raw edge of the fabric.

Thanks, I'll have to try it now.

Oh I want to try it too. Too bad my embroidery machine is in the shop. Hope they get it fixed soon. Jenni, on that website, do you use as much stablizer as they recommend? When I applique with my sewing machine, I usually just use a tear away underneath the fabric I'm doing.

Oops, I thought you meant embroidering on a regular machine. What's an embroidery machine? Is it a seperate machine or an attachment for a sewing machine?