Went through your steps and appeared to cover everything. Once document was set up (sample data as PDF file, select PDF emulation, set as background) then setting the fit to size setting and 8.5 x 11 size in the picture object - I saved as a template and sent it to workflow. This created a .ptk file that I used in the workflow Printer Queue Output.
Restarted workflow and tried a few prints. This error appeared in the service console:

PDF Emulation is not available in this version with line

W2032: Error producing job of document TESTtemplate for printer PRNTNAME: PDF Emulation is not available in this version

Printer Queue Output: Printer Output Failed

Our version is 7.6.2.9999. Is the PDF resizing not supported in our version of did I set something up incorrectly?