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My questions are: Is this the appropriate tool to use for the correction I am trying to make? Am I doing something wrong with the curves layer? What should I be doing with the curves layer to mask out everything from 25 percent black and higher?
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These questions are very hard to answer without seeing the image. You will do different things to different images based on what you want to achieve. Is there anywhere I can see the image?
As far as getting a checkerboard when you click Clear Grayscale, that sounds like absolutely the right result -- the tool changes the view of lighter tones to transparent. If there is nothing below, you will see the transparency grid. Obviously I can't vouch for the fact that you are using the tools correctly.
Please post the image and we'll have a look.