The pattern photo shows the unfinished size for the block. Usually most patterns note the finished size - meaning without seam allowances. That may be where you were initially led astray. I always think in terms of the finished size of a block. In this case, each unit finishes at 3". For the plain squares, cut 3 1/2" squares - no trimming necessary. For the half-square triangle units, first cut each fabric at 4", sew the diagonal seams 1/4' to each side of the diagonal, and then trim the proper cut size of the unit to 3 1/2". For the quarter-square triangles, first cut squares at 4 1/2" ( 1 1/2" beyond finished size), then sew the first diagonal seams 1/4" to each side of that diagonal (just like the half-squares aforementioned); then press seams to one side. Do not trim at this point. Then nest the seam allowances and cut from plain corner to plain corner, 1/4" on each side of the diagonal. Cut between those last two seams and press each seam allowance to one side. Now you are ready to trim these resulting squares to 3 1/2".