You etch the print once it's been mounted, or if yo don't mount your prints, when you're ready to hinge-moun it. It most certainly has to be dry.
You could also spot the negative, and instead of etching the mounted print, you spot the light spot created by spotting the neg.
Etching is pretty easy, but you do have to be careful. Gentle is the key word, and make sure you take your time. Don't try to dig the spot out of the emulsion; rather, gently scrape the emulsion until you start to lighten the dark spot.