I’ve come across this a couple of times already and I don’t get what I am doing wrong.
All entities are on the same layer, the circle is on the exact same level as the outer edge and yet the inner circle is not a selectable face on it’s own.
Turn on Profiles in Styles > Edge settings. That way you can tell from inspection whether an edge or shape has properly intersected a face. If an edge remains thick (a profile) it has not cut the face.
Sometimes, SU fails to intersect an edge with a face. You can usually remedy this by tracing over one segment of the edge with the Line tool.
Layers are unrelated to this issue. However, the fact that you mentioned layers in this context suggests that you need to get up to speed on the peculiaritries of SU layers before you get into trouble See this article: Does SketchUp support layers?