You need to extract an edge (actually several seperate extractions) all around the area to create what amounts to a continuous boundary for the facing or pocketing operation. Then it should work.
SMT operations (Z-level and planar) do not require extracted geometry to do their thing, although sometimes you will want a 2d wire frame to create a boundary.
BTW, XR3 has some even cooler features than XR2.....I don't imagine they are selling XR2 any longer.
First you get good, then you get fast. Then grouchiness sets in.
(Note: The opinions expressed in this post are my own and are not necessarily those of CNCzone and its management)