Thank you for your help. I figured it out - you have to do the provisional cast-on which will give you the 10 live stitches in order to continue. The knitted cast-on instructions are for making the picots. I wish the pattern was clearer about these.
The modified conventional BO for the picots is confusing & difficult at first, and it twists one direction. The traditional BO I'm used to makes the picots twist the other direction. I'm assuming I have to adjust my tension somewhere, I think, I will have to continue playing around with them.
Thank you for all your help!