You won't believe this: you solved it!!!! More to come but this silly step---save direct to clipboard, solved the problem. I have to run for 90 min or so. More later. THANK YOU!!
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Thanks again! I just tested this with my intended workflow and Click at Found Image once again works like a charm--flawlessly. Thanks for recommending this!
I am nevertheless also rather intrigued by why this is. That clunky workflow I described earlier--open Preview, copy to clipboard from within there, etc, was the workflow I used to use. You pinpointed the problem though. Way good!!! Thank you again for your time and for coming up with this idea to try. (I'm still gobsmacked it worked!)
FWIW, I use Snagit to capture my images for "Find Image" actions. I crop the image a little in the Snagit editor, copy it, and paste it into the KM action. Works perfectly.
I realize it's probably overkill for this situation, but I've used Snagit for a really long time and it has a lot of cool features, so I'm kind of partial to it. 
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Hey Dan,
@JMichaelTX turned me on to SnagIt.
I needed a good replacement for Snapz Pro X, which is no longer being developed.
SnagIt has been my go to screenshot tool for something over five years now, although I do use the built-in macOS tools for simple stuff most of the time.
-Chris
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I used Snagit back when I was a Windows developer, 10 or 15 years ago. I was thrilled when I found out they had a Mac version also.
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I had an issue with Found Image not working, and discovered that my screenshot was of the wrong state of the target... I pasted in a shot of the result, rather than the starting point, so of course KM didn't recognize it.