For anyone still having a hard time getting a 16 1/2" block and having trouble getting a perfect 1/4" seam... I took a slightly different approach to getting the 1/4" seam right and it seems to be working so far.
Rather than testing the accuracy of the 1/4" seam in the more conventional way, I took one of the paper templates, cut on the line for the seam allowance and then used that as my test under the machine. I placed the needle on the paper seam line, placed a "purple thang" to the right butted up against the template, then stitched on the seam line of the paper template. If stitching stayed on the stitching line, then my purple thang was properly aligned and because I used the actual template, I knew I had a perfect 1/4" seam. Instead of the purple thang, you can use post-its or tape.
While I have not put all the blocks together to finalize the star block, ALL of my points are aligning perfectly so far. I hope my block will finish at 16 1/2"--it should, I'll let you know!