I use Steam a Seam Lite 2 all the time and have never had any problems with it. I've never had skipped stitches or had gummed up needles. It's always been a delight to work with. I've never worked with Heat-n-Bond before, so I don't know how that works, so I can't compare the two. I'm so sorry you are having trouble with your applique. Did you try a new needle? New thread and new thread in your bobbin?
I applique all the time and that's all I ever use, so I'm trying to figure out what else could be the problem.