I'm trying to use the fill tool to fill in this area. But inkscape keeps saying "Area is not bounded". What exactly is considered bounded. I added the red dot so you know where my cursor was.

- Both lines are in the same layer.
- Both lines are pure black (I noticed in some images it doesn't work if a all lines aren't (0,0,0,255))

What else am I missing?

Why would you use the fill tool for this, and not just change the fill color, or use a boolean operation to attain your goal? What is your goal?

And yes, it should work like that. See Xav's post below. The screenshot didn't expand for me, so I didn't look close enough to see that.

Reduce the threshold slider. That is used to determine how different adjacent pixels can be to still be counted as part of the background. By setting it to 100 you're basically allowing the black to be within the threshold, so Inkscape doesn't "see" the boundary and thinks you're filling an infinite area. With a flat background colour and good contrast with the boundary, you can afford to set this slider pretty low.

The threshold slider fixed it, thanks.