Joshua,To do the trace you need a flow direction grid. If you have that, the Arc Hydro tool bar has a trace tool that draws a graphic line (not feature) along the flow path. You need Spatial Analyst (SA) for this. The graphic lines can be converted to features using a function in the Draw toolbar pull down menu and possibly some other tool.To get the flow direction grid, you have to process the a DEM. Arc Hydro or the geoprocessing and SA hydrology tools can be used for this. You may need to Recondition the DEM (Arc Hydro term for when you "burn in streams" to eliminate bridges that "block" the stream in the DEM.) You may also need to "build walls" where the DEM watershed boundary is not well define by the DEM (very flat areas and/or low-res DEM). You will need to fill in the "sinks" so that every internal cell of the DEM has a cell next to it that is lower than it that will allow the proper determination of the flow direction along the surface and the flow path will not stop mid watershed.To burn streams and build walls simply using SA, you have to create polylines for the streams and walls, convert each of them to rasters and then subtract the stream raster from the DEM and add the wall raster to the DEM. I suggest using a large number for the stream raster value (1000) and a small number for the wall raster value (100), this way when you build a wall after burning the streams, any stream that have to go through walls will not be "blocked" when you do the fill sinks function. The stream and wall values don't have to mimic reality. You are looking to get the flow direction right, not the elevation. If you want the right elevation, go back to the DEM.One tip is that you only need to burn stream when the DEM ill defines or miss defines a main flow path that you know for certain exists. You can burn streams where underground storm drains exist. You can burn streams through bridges or culverts on creeks. You don't have to burn streams where the DEM defines them well. If you burn streams where the DEM defines them well, your stream polyline could end up poorly representing the stream.Likely more than you asked for.... Hope this helps.