I used a black and white damask image to do the following:
In Inkscape, open jpg file. Select image. Under PATH, click trace image. In the box, use Edge Detection, increase threshold, then click Preview. Increase threshold or adjust as needed to get good outlines. Click OK. Move selected image away from center, and you should see your outline underneath. Delete the selected image, leaving just the outline image.
Now, go to Save As... Name the file. In the Save As Type box, click on the arrow, and select "Plain .svg" Then save.
You should now be able to open this in SCAL, and proceed to make your cricut files.
HTH.
The only way I've successfully converted jpg to svg was to use Inkscape and then import into SCAL. You can find a free download of Inkscape on the net. I try to avoid this because I use a mac and have to run inkscape in parallels and then move it over to SCAL which I run in mac environment.
You might give Inkscape a go. Sounds like that is what will help you out. Good luck and let us know how it works. 
You also might like to try Vector Magic, an online bitmap to vector convertor. It can save the converted image as SVG for use in Inkscape. I find with many images Vector Magic does a better job than Inkscape and even commercial products.
This is how I convert jpg or gif to svg using Inkscape.
1. Open Inkscape.
2. Import jpg file into Inkscape.
3. Click on the image to select it.
4. Go to Path then select Trace Bitmap then select Colors box and hit OK. (it may seem like it didn't do anything but it does, just close the 'path' window to regain access to the image window).
5. Back at the selected image screen save the file as a plain svg (this is a drop down option).
6. Open SCAL and click the 'SVG button' and find your new saved svg image.
Hope this helps! Let me know if it worked for you.
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