Some times I use silk thread. The white was just dual duty. I use what ever thread I have. No special thread. Regular 82/20 needle. Have you tried the light heat and bond ? Draw your pattern on the smooth side, iron it to the back of your fabric. Cut it out, take paper off and press it to where you want applique. Then stitch around with blanket stitch/hem stitch or other decorative stitch. Sometimes I have had it pucker too.