I've been making washcloths, too, and I've wanted to try entrelac anyway, so I've worked through up to where you're stuck.
What you're doing after the (side) increasing triangle is making a square to fill in the space between the 2nd and 3rd triangles on the "row" below.
I've made a small drawing that I'll send you. Note the arrows. The top arrow indicates where you are when you complete the directions for the increasing side triangle. The bottom arrow indicates where you're going. So, you're picking up the stitches along the left side of the third base triangle.
Hope this helps.
P.S. No breaking thread required (here, anyway...)
P.P.S. Once you pick up the 8 stitches & turn & knit back, each time you K7 and do the SKP, you're picking up another stitch from the right edge of the second triangle from the row below, connecting it to the rest of the piece. Pretty cool, this entrelac...