Finally, I coated everything with two coats of water based clear polyurethane. The carving went well using the same bits that Michael recommended. I hope you enjoy it.
Attached is my version of Michael Tyler's Welcome sign from the free projects. I had a piece of locust with natural edges that was just right and some miscellaneous hardwood for the cabin. After carving the pieces I screwed and glued them together. I applied two coats of wood hardener to the edges because they were a bit crumbly. I also sealed the area for the letters with sanding sealer. After those were dry, I hand painted the letters with two coats of exterior latex paint.
Vectric Aspire, Cut3D, VCarve Pro, AutoCAD lite, Draftsight, Corel Draw X6, ViaCAD Pro 9, W 10