@Nancy1209 DO NOT CANCEL. There are a lot of penalties for hosts if they cancel a confirmed reservation.
Don't feel bad at all. An Inquiry is just that- someone asking questions. Most Inquiries don't lead to reservations, in fact, you are likely never to hear back from someone whose Inquiry you answer.
The way it works is first to pay gets it. You snooze, you lose. When you pre-approved the Inquiry, that person could have gone on to book it immediately, which they didn't.
But it seems you don't quite understand Requests to Book, either. It isn't a booking until you Accept it. As soon as you click on Accept, that guest's credit card is charged and it becomes a confirmed reservation.
And you need to understand the terms, or you'll confuse yourself and others who you ask for help here.
Host's choices:
Inquiry: Preapprove or Decline, or simply answer within 24 hours. An answer is all that's required if you aren't certain whether or not you want this guest and want more communication with them before deciding whether to pre-approve or decline. And you don't have to do either of those.
Booking Request: Accept or Decline. You have to do one or the other within 24 hours. But you can still exchange messages with the guest in the meantime.
And if you have Instant Book turned on (not that recommended for a new host until you find your way around all this) a guest who Instant Books is confirmed without you accepting, it's automatic.