There are two naive-user stumbling blocks in Create Hole that can make it impossible to select reference edges unless you know the trick.
First, if Body Edges are not selectable when you invoke Create Hole, then the reference-to-edge feature will not work. You can go to Selection Filters and manually check Body Edges to make it work, but many naive users will not think to do this. It took me a long time to figure it out and in the meantime it was infuriating that it "used to work but now it doesn't". It would be nice if the hole tool temporarily added Body Edges to the Selection Filters set, since a primary feature of the hole tool depends on edge selectability.
Second, if the hole type is "simple", there are two drag controls on the hole image - the center one for position and the circumferential one for size. If the size one happens to be selected, then you cannot reference to an edge. And it is not always obvious that there are two such controls, because they are often tiny and close together. One obvious way to get into "select and edge" mode would be to click on one of the Select boxes labeled Reference, but that does nothing. I think that clicking on one of those Reference .. Select boxes should switch to position-not-size mode and draw a distance arrow to the nearest edge.
In most other dialogs, if you click on an un-highlighted Select box, the dialog switches to the related mode; this one does not follow the usual pattern.
