How do I Create a template to fill in underlined area on existing certificates?

If you have (or can access) a scanner. Scan the certificate as a bitmap format.

Create a new blank document and insert the certificate image full size into the header view document.  If the certificate is smaller than the page, put the certificate top centre of the page.

Set the wrap of the graphic to Behind Text. Drag it to the edge of the 'paper' so that it appears as it does on the certificate itself.

Close the header view.

Create a borderless table over the area of the graphic that you want to fill with the cells where the text is to go.

Write some text in the cells as appropriate.

File > Options > Display > Uncheck 'Print Drawings Created in Word'.

Print the document on plain paper.

Hold the paper over a certificate and ensure the text lines up with the text spaces on the certificate.

Make any minor adjustments to the table.

Print and check again.

Print on the certificate itself.

What Graham suggests is what I would advise as well. Others might suggest using text boxes or frames, but a borderless table is really the easiest and most trouble-free approach.

Although having the scanned certificate as a background does help with placement, you can also do it with just a ruler to measure the distance of the lines from the top of the paper. Since the first line is probably quite a ways down the page, set the top margin accordingly. Don't forget to set an exact row height for each table row so that text entered in one will not affect the next. You can also use the horizontal and vertical alignment settings to good effect--to place the text either at the top of the cell or the bottom depending on where it is in relation to the printed line.

Once you have the needed table cells placed as required, you can add your merge fields to create a mail merge main document. Instead of opting not to print the background, you could also just delete it once you have the fields placed properly.