Hello Austin Welcome to Talkgraphics

First the background erase works like this: first use the photo mask painter to show the areas that you want to keep. the mask Painter is on the new flyout bar with the regoin painter and all the masking tools. Then select the eraser tool and use that to erase bits of the back ground this tells the program what you want to remove. Depending on your photo you may have to zoom in and get in close in areas where the background doesn't have a lot of contrast with the foreground object you want to mask out.

When you are done click the background eraser button on the eraser tool info bar and let Xara do it's magic

I assume when you say linked copies you mean Live copies and yes that's a Designer Pro only feature.