You keep knitting with the 60 st. I think you're kntting the sides and bottom part of the bootie now. In the end you'll need to seam the bottom and the back of the bootie.
When it says pick up a st 5 rows down, it usually means to look 5 rows below the next st on the left needle, scoop that st up onto the left needle and work the 2 sts together. It's usually done for an entire row to create a rib or tuck. Does that make sense with the picture?