Augmented Reality (AR) surgical navigation systems are emerging as the next generation of intraoperative surgical guidance, promising to overcome limitations of traditional navigation systems. However, known issues with AR depth perception due to vergence-accommodation conflict and occlusion handling limitations of the currently commercially available display technology present acute challenges in surgical settings where precision is paramount. This study presents a novel methodology for utilizing AR guidance to register anatomical targets and provide real-time instrument navigation using placement of simulated external ventricular drain catheters on a phantom model as the clinical scenario. The system registers target positions to the patient through a novel surface tracing method and uses real-time infrared tool tracking to aid in catheter placement, relying only on the onboard sensors of the Microsoft HoloLens 2. A group of intended users performed the procedure of simulated insertions under two AR guidance conditions: static in-situ visualization, where planned trajectories are overlaid directly onto the patient anatomy, and real-time tool-tracking guidance, where live feedback of the catheter's pose is provided relative to the plan. Following the insertion tests, computed tomography scans of the phantom models were acquired, allowing for evaluation of insertion accuracy, target deviation, angular error, and depth precision. System Usability Scale surveys assessed user experience and cognitive workload. Tool-tracking guidance improved performance metrics across all accuracy measures and was preferred by users in subjective evaluations. A free copy of this paper and all supplemental materials are available at https://bit.ly/45l89Hq.