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I am having trouble applying these story points; My Impact Characters Issue is Knowledge, her counterpoint is Thought. I get the definitions of these terms, but I don't understand the usage of issue vs.counterpoint in the story. E.g. IC's Issue is Knowledge. In my story her knowledge (what she holds to be true) is that she is better than her enemy, I was putting her Thought (the counterpoint) as her thought process of how she is going to destroy her enemy, based on the 'Knowledge' that she is justified because she is superior to them (sounds extreme but these are heads of state competing for ruler ship and limited resources etc.) The next story point asks for an illustration of IC's impact balancing knowledge vs. thought in the story, as if these two principles are opposed to each other, and 'balancing' each other. The way I have it is that they are 'complimenting' each other; knowledge= she is superior, thought = machinations of how to destroy her enemy. What am I missing? Is it that they balance, or can they compliment?

They can balance or complement -- your choice. A thematic argument explores the positives and negatives of the thematic topic and its counterpoint. Here's a short example of how a Main Character might contemplate Knowledge versus Thought:

"I find knowledge of utmost importance. Knowledge, for Knowledge's sake, is perfectly acceptable to me. While Thought is useful, and the great Thinkers of our time notable, the practice of pursuing Thought outside the context of discovering Knowledge is a waste of time."

I hope this helps.