The guide is there to give you two edges to insert your paper up against.
Look at the 4th picture in this post:
New Twist on the Scallop Edge Punch |
If it isn't working properly that way, then it is possible that the guide isn't inserted all the way into the base or isn't inserted properly. Just be careful removing it if you do. You don't want to break it. But it does kind of snap into place. And the printed edge-of-paper lines on the top of the punch line up with the edges of the guide if you are looking straight down on the punch.