You dont understand: Paint.NET (Not VectorMagic) cannot vectorize images, work with vector images, create vector layers, NOTHING. Paint.NET CANNOT work with vector images!
I don't care what you call it, all I know is a while ago I saw a tutorial for paint.net that had step by step instructions for making a picture go from the "before" image above to the "after" one. I probably won't be able to find it but I'm try like hell to & if I do run across it again you'll see...