Overprinting will not resolve what you want.
In the screen shot below, I have placed a yellow rectangle behind the art to show just where the red was is now cutout. Is this what you want?
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Hello Mrs. Cat,
I used a different application to punch the holes through.
However, you do know that unless you are using white ink, that anything colored white will allow the substrate to show through, right? Which means the white parts that it still have will not allow the black underneath to print and allow whatever this is being printed onto show through.
In any case, I have attached the file I modified below. It should open fine in X5. I used X7 and saved it back to an X5 version.
Mike
CREST SWORD-2color_final-modified.cdr