I have imported an image, and I have selected the pencil tool and traced the image.  Now I see a grey box around the area that I have traced.  I can actually select this grey traced area and move it around and see that it exists, but it doesn't seem to relate to the image at all.  What I am trying to do is trace a portion of the image, and then send this to a new lawyer or at the very least be able to cut this out of the original image and move it around.  For example I have a cartoon man.  I want to cut his head and move it to a new layer.  I need this new layer to be detached from the original body....  So I assume pencil > draw around the head > move to new layer would work.  But it does nothing.  What am I doing wrong and how do I get the pencil tool to do what I need?

Please step through the Tutorials in Inkscape's Help menu. They will provide a foundation to vector illustration tools in Inkscape.

Then, I'd look at the Pencil Tool and Path Operations in the manual: https://web.archive.org/web/20231226095757/http://tavmjong.free.fr/INKSCAPE/MANUAL/html/