How to trace:
File -> Import
(opens a dialogue window and you choose the image you want to import. Then you can imbed or link the image. I embedded it)
Path -> Trace Bitmap
(This opens a dialogue where you can adjust the way the bitmap is traced. I accepted all default settings. Click OK and it will do it, although the first time you do it almost appears nothing is happening. The dialogue doesn't disappear when it's finished you have to close it )
Once the tracing is complete you can select the embedded bitmap using the Select and Transform objects tool - the black arrow in the tool box - and delete it if you want to.
Pretty interesting, huh?