Knitters here generally hand knit with needles. Loom knitting is not something we know little, if anything, about. Have you tried youtube or looked for a loom knitting forum?
Step 6 looks like a knit 2 purl 2 rib. Knit 2 stitches, purl 2 stitches, repeat that pattern across.
Happiness is catching that dropped stitch while it's still fixable..