So, first thing to do would be to get a larger version of the image, if you really want to cut the horse, and need the whole file in vector data, using the trace bitmap feature. It's just much too small for getting a good trace.
If the problem were really only the frame, then that can be drawn quickly using the Bézier tool (b), and then converting stroke to path.
You would only need to switch to the Bézier tool, then click on all the corner points (10 of them) and finish it by clicking on the first point again, then drag on the curved segments with the node tool (n) until their shape is as you want it, and then adjust stroke width and color with the Fill and Stroke (Ctrl+Shift+F) dialog, second and third tab. Then do Path > Stroke to Path and you're done.