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Hello @Ethereal_passion5340,
I appreciate you sharing the screenshot. The Image Trace options typically appear disabled when the chosen object is not a raster image. Image Trace functions only when a genuine pixel image is selected on the artboard; therefore, if you are selecting a vector shape or an empty layer, the panel will remain inactive.
Please attempt to select the original raster image you wish to trace and see if the panel activates again. Reference: Image Trace panel options.
Let me know how it goes.
Abhishek
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Is the image selected? Is it a bitmap? Is the layer locked?
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