I'm sorry I haven't been on for a little, but I have been a little busy creating new files and uploading for sale. In the interim, my friend Shelly and I have been emailing back and forth on the easiest way to convert .KNK files to .GSD.
She was describing using Inkscape and I was describing how I use the Screen Capture method located in the manual. As sometimes, I cannot explain everything the way I want to, in the end I told her it would be a lot easier if I just did a little video which is attached below. There is a small part in the middle in which the voice is garbled (and I can't figure out how to fix it) but no great loss...I tend to ramble anyway! All I am saying in this section is if you click outside of the area, and then go back and click in the center, you can drag your .bmp off to the side before deleting. If you have any questions, let me know.
There may be even faster and quicker ways, but this is what I have been doing for a while and it seems to be working. If you have larger or more intricate pieces you may have to do a few pieces at a time and save as multiple .bmps. I found this to be especially helpful when I converted the Lady Liberty file.
Hope this helps to clear up the "mystery" a bit!