JPEG images are opaque, so if you stack them, you will never be able to see both.
Why are you importing more than one copy of the image? Since you’ll be converting to vectors, you’ll be colouring the vectors. The colours in the original image will have nothing to do with the final file. Just place the file and either use Live Trace (if using version > 11) or put it on a template layer and trace with the pen tool on a higher layer.
Are you saying after doing the live trace you can't see the traced image below? On the top layer/image which has been vectorized take the magic wand and click on the white space. If you are able to select this white space on the top layer try deleting it. Now do you see any image below?
I'm not ignoring either of you but am working on some of your comments and digging into some lessons specifically on this aspect. I'm still a bit baffled because I have done this easily before without problem. I'm trying to understand what is not working here and how to avoid it in the future.
Transitioning over from Corel I am still a novice with the Live Trace and Live Paint processes. It is working for me right now but I am pushing the envelope in playing with other aspects of it to see its capabilities.
Thanks again for you comments, they are being worked on.