Sidecar works as second display but Apple Pencil not responsive

Maybe I'm missing something here, but all the videos I watched show the user using the Apple Pencil within apps on sidecar in the iPad. Mine will not do that. Sidecar works as an extra monitor or mirror but thats it. My Apple Pencil works on the side menu in sidecar, but is unresponsive within any of the apps ie; Illustrator, or web pages. I still need to use my mousepad for anything else. I have a 2017 MacBook Pro 13" without Touch Bar ( another thing that supposedly sidecar will include but doesn't for me), when I go to preferences and choose Touch Bar up top or below if provides a blank black space within sidecar on the iPad. My iPad is a Pro 9.7" with first generation Apple Pencil. I have tried all day to figure out how to get the pencil to work as a cursor and work in illustrator, and nothing has worked. What the **** am I doing wrong?