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Solved! Go to Solution.
Solved by Jrobker. Go to Solution.
You have to insert the DWG into a family.
Jrobker is correct. By default, imported .dwg files (2D or 3D) are not "cuttable" in Revit. There are a couple ways to make a family out of the .dwg.
1)
Open a Generic Family.
Insert the .dwg.
Save the Family.
Load it into the project.
2)
In the project, start an In-place Family.
Insert the .dwg.
Finish the Family.