The thickness entered into the Unknown Materials slot is the thickness above the normal level of the surface of the tray, if it were in there. (That generally runs 1.37" to 1.4" from the bottom of the machine and can be measured accurately using the techniques described here: Cutting without the Crumb Tray.)
You have to prop the object up so that the surface to be engraved falls into the range from 1.4" to 1.9" from the floor of the machine, and then subtract 1.4" from the total height of the object. The top surface of the tray is considered zero height. That means that you can’t enter a negative number, and the only acceptable range for the Unknown Materials thickness is from 0 inches (1.4 inches tall from the bottom of the machine) to 0.5 inches (1.9 inches tall from the bottom of the machine.)
(That tutorial explains it a little better.)