Cut-out shape from jpeg in Illustrator CS2

Hi,
I would like to "cut out" a dollar sign ($) shape from a jpeg image so that I can "see through" the dollar sign to what is behind it. I have attempted to do this several times using the Compound path tool, Divide objects below, and everything else I can think of. Nothing works. First, I flatten the jpeg image. Then I create outlines of the dollar sign. When I select the dollar sign and the jpeg and click on "Make Compound Path" I get the error message: "Can't make a compound path. A compound path cannot combine a clipping mask with an ordinary path." I do not have any problems cutting through a vector image. For some reason this jpeg is giving me problems. Can you help?
Thanks

You want to set it up the same way and make an inverted opacity mask.
select the $ and the jpeg with the $ on top can be live text in case you need to change to pounds or euro.
then in the transparency panel select from the flyout Make Opacity Masks then in the transparency panels setting uncheck clip if selected and check invert.
You should get this

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