Workaround: use shapefiles instead of database files. I am using v10.1. Myself and colleagues have encountered the problem where 'Trace' does not work consistently while tracing polygons in a GDB. Today it would not work at all, even after creating a new mxd and restarting Windows and cleaning my temp folder. I converted the polygons we are tracing to shapefiles and now the 'Trace' tool is working again. The polygons I am creating are still in a GDB. I will update if this also stops working.
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