First thing…measure the thickness of the foam, unscrunched, with calipers. Just check it to make sure it is less than 0.5" tall. (Don’t try to cut it on the tray if it is over 0.5" tall. Period. It’s possible you got a slightly thicker batch of the foam. That warning, and the shut down, is a safety measure to keep fires from happening.)
Having said that… it is possible that you got the warning in error. That can happen if the foam is dark colored. Try placing some white masking tape over the spot where you use the Set Focus tool so that the red dot can be seen by the camera. (Set Focus, and auto-reading, don’t work really well on dark materials.)
Things have changed quite a bit with recent upgrades to the system. The Set Focus tool was announced here: