make sure that the rectangle is behind the letters
It seems to have a clipping path somewhere that I cannot locate what I would do is start all over and this
time do not make it a live paint group.
fist create the large text, then the smaller text and place it over the larger text select all the text then use the command Create Outlines then place all the text over your rectangle then use minus front.
Right now you tried several things it seems but never used the undo just go abut in a step by step approach
well, you could try selecting one of the live paint groups and then use Object->Live Paint->Expand but it works just fine for me though i'm on CS4 (not that they made any big modifications to the subtract from shape area command)
Are you sure it works fin or does it just appear to work fine do you
have one complete shape that has no fill?
The easiest way I cold do this with this particular art was to make them all Live Paint group s and merge them usig the merge live paint groups in the control panel.
Then filling the correct shapes with a fill of none.
First off to the OP, in CS4 they changed the name of Subtract from shape area to "Minus Front" and they switched the way the Alt key works so now you if you click on any of the icons on the first row you also expand the shapes.
Ok, with that out of the way, to get this in CS4 to work, add a rectangle behind one of the Live Paint Groups, select both the rectangle and the group and Alt+click on Minus Front and then click on Expand, for some reason it doesn't work if you just click on Minus Front.
I didn't want to mention this because the OP is on CS3 so he shouldn't have this problem, just clicking on Subtract from shape area should work there. If for some reason it doesn't work then as i said in my previous post, select the Live Paint group and go to Object->Live Paint->Expand and then try using Subract from shape area.
First I though t they wanted all that text excluded secondly one of
the live groups won't do what it is supposed to do.
And I understand all you wrote.
The OP would be best starting ll over. Out line the text and use
you mean the middle layer with the white in the holes? that's easily fixed with the Live Paint Bucket