Yes I have followed the pattern to the fourth row, knitting the short rows...no problem there as far as I can tell.
No, I don't think I am confusing two things. I don't have a slipped stitch. I am only assuming that in order to get rid of the wrap once it is picked up with the right-hand needle that the only way is to slip it over the next stitch: ie the wrapped stitch itself which is now being knittied.
The pattern tells you to pick up the wrap onto the right hand needle. Once it is there is it not connected to the next stitch: the wrapped stitch, so when one knits the wrapped stitch it is not together with the wrap which has been picked up as directed onto the right-hand needle.
I could understand picking it up with the lefthand needle as then it could simply be knitted with the next stitch: ie wrap and stitch together. But picking it up with the right hand needle is completel different.
Sorry, still don't understand!