It shouldn't really matter what the exact size your hoop is, because the embroidery area used by the machine will be smaller than the hoop, and the design will be the correct size. Normally when you bring up a design to stitch out the machine will move the needle to the centre position of the sewing area (which will be 8" square), not the hoop which will be larger. I have never found a use for that plastic template. Also does the hoop have centre marks on the frame, if you have those use a ruler to mark the middle of each line after setting up your fabric, to make a cross. Hope this helps.
Also, as Feather says, you need room to accommodate the foot.