This is correct way to set your blade depth. Dotted cuts and skipping is usually too much blade exposed. Sign vinyl is only 2-3 mil, You only cut with the very tip of the blade. Make sure you haven't broken the blade tip off.
To start with, you should set your blade depth correctly, by taking the blade holder out of the machine, and in your hand, firmly cut across a piece of scrap vinyl, you will be cutting. You should only be cutting the vinyl and barely a mark on wax paper backing, Adjust blade to get there, Then put the blade holder back in machine, and use the force of the machine to get there, same results, only cutting the vinyl and barely a mark in wax paper backing. You should just barely see and feel your blade tip out of the blade holder.
Blade offset is for making the corners sharp.
Correct combination is less blade, more force.