I have a need to create a sketch entity containing geometry that I want to use repeatedly in various places.   It seems that creating a Library feature would be a good way to save this geometry rather than recreating it everytime I need it.   The feature I want will be a 2D sketch, used to drive an Extruded Cut on a flat part. 

I have learned how to create the geometry I want and save it as a Library Feature.  I am still not totally clear on the concept about "References" vs "Location" for locating the Library Feature, but the sample sketch I have been working with used the "Location" feature.   I think that's working.

My problem is that this Library feature is not recognized as purely a sketch entity.  I want to make a part, then open a sketch on the part on a normal sketch plane, then I want to drag my Library sketch feature onto that sketch, then close the sketch and Extrude Cut the sketched feature through my part.  However, SW will not allow me to drag my Library Feature onto an open sketch.  It tells me I "have to complete the current operation," before I can do anything with the Library feature.   If I close the sketch window in my part, I am able to drag the Library feature onto my part, but then it still is not recognizing the Library Feature as a sketch entity, so I can't use it to do an Extruded Cut. 

Where am I going wrong?  Am I trying to do something that cannot be done with a Library Feature?  

Any help will be appreciated.