How do you do this???
 

I want to start with a sketch of a picture and where an invisible eraser erases part of the sketch and you end up with part color and part sketch (pic 2). I do have Adobe AF but I am clueless on using it. Just haven't taken the time to learn it. Hoping it could be accomplished in vegas.

if i understand you correctly its pretty easy to do in Vegas,
Have full colour track on top,
underneath have the same track and add col corrector or curves or black white etc, whichever one you want to use to get your black and white image. (Id use curves, it has a cool pre set, negative shadows, might look good.)
on the top track draw a small mask and make it positive with a large amount of outward fade,
animate the mask with key frames to get bigger and simulate your rubbing eraser, the larger the mask gets, the more of the colour shot will show through.
:)

Bump Map effect
 

try adding the "bump map" effect in addition to black and white... sweet! In the sample footage I messed with, I liked the "Z" slider set at 6, or slid all the way up.
The shininess slider seemed to tweak the result towards and away from a flat sketch effect as well.

For the eraser part, possibly use something like Digital Juice's 0001_MDT01_Scribbles_A scribble element as a a mask?
Motion Designer's Toolkit 1 :: Digital Juice

Gerald's use of the event pan/crop mask tool worked very well too, though.
First time I finally got that thing to work for me!
I actually had my masked-b/w-bump mapped image on the upper track with a "negative" mask, feather type "both" and feather % = 2 Not sure if there's a benefit to one way or the other, top/bottom, +/-?

Cool stuff guys!