OK, I think I may have cracked it at last! After all the trial and error I have done over the past 24 hours, I have come up with a set of rules and recommendations for reliably creating cutting components. I would be very interested to hear if anyone disagrees with any of them.
Some of these rules come from studying videos and printed advice but I have found the reasons for doing certain things thin on the ground (such as why you model a vertical thing flat - seems to be related to thumbnails). I don’t remember coming across anything that includes all these points in one place.
Here they are:
Rule #1 - Start with a flat surface larger than your component. This will correspond to your cutting plane. Model flat even if the component is something you would normally model vertically. It doesn’t matter if it stays modelled flat as you will be gluing it to a surface when you use it.
Rule #2 - Create the component as soon as you have enough geometry to do so, even if it is just a surface with a boundary. Then you can delete any surface outside it. This is more of a recommendation than a rule. It reduces scope for error in drafting.
Rule #3 - The loop around your geometry (its boundary) is effectively your cookie cutter that will be what cuts into a surface. You don’t need it to have a surface itself and the loop can be hidden, but it has to be there and it has to be continuous and coplanar.
Rule #4 - If your component has depth, you can extrude it up from the cutting plane, down from it, or even model away from it. You may want to group the main elements of your component. If you do, make sure to exclude the cookie cutter as this always has to be raw geometry inside the component.
Rule #5 - If you want to use the component in other drawings, save it from within the Component Browser. Do not use File>Save or you will lose its cutting ability.
Rule #6 - You can change the origin of the component by moving the Axes within it but make sure the red and green axes retain their original orientation. You are just moving their centrepoint.
Rule #7 - A Dynamic Component can have cutting ability but make sure the cutting loop stays raw. the rest of the component can be broken down into as many sub-groups as you like. The dimensions of the loop can be controlled by the overall dimensions of the component, ie. the parent group.