Inkscape is a free vector graphics editor (like Adobe Illustrator) that can export to DXF (which AutoCAD opens and converts to DWG).
The best free method actually combines both. You use free tools to "Auto-Trace" the rough shape, and free CAD software to clean it up. convert jpg to dwg for free exclusive
Inkscape will generate a vector path directly over your JPG. Drag the original JPG to the side and delete it. Inkscape is a free vector graphics editor (like