Hi NeilBaker, Welcome here,
There are several issues with your model.
First if you want to pocket the sketch in the existing part, it should be in the body, not out of it.
Second there is a "lost" arc in your sketch that you can find by zooming at the point shown by the below picture (green arrow). It is named "9-Arc" in the Elements list.
There are also 2 missing coincidences (purple arrows). But endpoints are so far from each other that tool doesn't see it.
You can find all that problems by clicking on the "Highlight open vertexes" of the sketch validation tool.
After patching this issues, the pocket works correctly.
Third it would be better if your sketch was fully constrained (although this isn't mandatory).