Welcome and agree with Scowlcat -- definitely cut the middle out of your fusible (some pieces you can use later)....Otherwise your applique will be very stiff.
There are three main machine stitches that I have seen used:
(1) Satin (very close zig zag)
(2) blanket
(3) Straight stitch close to the edge
I used to prefer satin, but am becoming more fond of blanket since it doesn't make it as "heavy". Nor does it use as much thread!