Insert Edit not working?

I have a clip in the Source Monitor. It is marked with an in and out point. i've put the playhead in the timeline at the end of a clip. From what i've read and watched, this is a good setup for inserting a clip from the Source Monitor. It seems ideal to me!

However, when i click click the "Insert" button in the Source Monitor OR the comma key shortcut, nothing happens. Why is that? What am i missing here?