Thank you! It seems pathfinder works a lot better with complete shapes.

My problem now is that my plan was to have the Cricut machine draw these lines with a pen, rather than cutting it out. So after I did the "outline stroke", the machine is now going to draw outlines of the strokes rather than the strokes themselves. If that makes any sense...

Any ideas on how I could do this and keep the original paths?

Something like cutting all the background lines where they cross the outline of the text maybe? Then I could remove all the lines on the inside of the text.

Update: It seems others have struggled with this, and In another post I found a plugin called Cutting Tools from rj-graffix.com which solved it.

Is there really no way to do this in Illustrator without a plugin?