No, you don't need four needles, just 2. After you did the "s/1 kwise, k1, p1, k7, ssk, k1" drop that yarn right there (just leave it there as you will be coming back to it on the next row) and then put the next 22 on a holder, take a separate ball of yarn and start knitting with it on the stitches to the left of the 22 you put on the holder (using the same needle to knit with that you used at the beginning of the row). You will do the "K1, K2tog, K7, P1, K2" and then turn and work the next row however you are supposed to do it up to the gap. Drop the yarn there and go over to the one waiting on the other side of the gap and use it for the rest of the purl row. All the purl stitches end up on the same needle. Turn.
Now do a decrease row again since it says do it every other row. All your decrease rows will fall on the knit rows and you are to do four more decrease rows after the first one, for a total of 5 decrease rows. Just use the same needles for all of it working right across the gap, but use the separate balls of yarn on each side of the gap.
I hope I made that clear.