I opened one PNG file in Inkscape and exported it as SVG. When I opened that file with notepad I came to know that the PNG file is embedded within it. If the conversion happened then the resulting file should have only SVG related tags. It shouldn't embed the image within it. Or Am I doing anything wrong.
Note: Save as option also producing the same kind of file. I am using Inkscape version 0.48 in Windows 7 - 64 bit.
This is a bit of an old thread, but it comes up early in Google so I thought I'd contribute something.
In Inkscape, you must do a trace to change the image into SVG. Look at the Path | Trace bitmap menu item and play with the options on that screen.
After creating the trace, you can remove your source image and have a pure svg in your saved file.
I've found it helpful to create layers in Inkscape and move the source image to one layer and put the trace on another layer to let me make quick comparisons using the 'hide layer' buttons.
BTW, your source image can be anything - bmp, jpg, png, etc.