Don't be discouraged. I'd suggest putting aside the pattern and just getting into the mindset of "fooling around with yarn and needles" for a while. Just make a few squares. Take some cheapo basic yarn and your needles. Practice knitting, purling, garter stitch, stockinette stitch, a basic rib (knit one, purl one or knit two, purl two). When you're pretty solidly refreshed on those basics, keep with the cheapo-yarn and practice the pattern you're going to use. Then, begin the pattern.
Remember that the first few rows are the hardest, and don't be afraid to start over. (But, give it more than a few rows before deciding that you need to start over.)
Also, make sure that you're not knitting on the points. When you push your needle into the loop, push it completely in. If you knit on the points all the time, you're going to get too-tight fabric.
Other than that, remember that we've all been where you are now, and nothing but practice ever got us past that point. You'll be fine. Just remember to relax and that it's supposed to be fun.