The tricky part is that the lines sewn parallel to the long sides, that are 1 1/4" in from the topstitching do not extend all the way across touching the short ends of the bag. In the diagram on Step 5, The solid line marked 7" on the four corners is not stitched it will be left open. The long dashed line between the 7" spaces you would start and stop with backstitching, that will create a channel / casing inside the bag along each long edge. You will insert the elastic into this channel by almost crawling inside the bag from that opening gap on the right side of the bag. Our teacher suggested taking each piece of elastic by the safety pin and push your arms all the way into the bag to the short side of the bag on the left....you will then put the safety pinned end into the channel from the left and back towards your body at the right short end of the bag. You will be entering and exiting that channel while inside the bag.
that way you have put the elastic into the casing channel from the left.....when you push enough elastic into the channel and the end of the elastic on the left is even with the left end of the channel, pin the flat end in place and sew it secure with an X. You will be stitching with your machine through both layers of the bag and the elastic. you then continue to push the safety pin in the channel towards the right side. You will secure it again with an x at the end of the channel.
You can see in the diagram on step 6 that the elastic channel is started and ends with an x. You are inserting an 11" piece of elastic into the internal casing with is a bit over 30" long. You can see in the diagram the gathered area where the elastic will be and it is secured with the X on either end. Step 6 shows the bag after the elastic has been inserted into each channel and secured down with the X. The 4 corners show the bag to be flat and still the opening unstitched on the right side of the bag.
The channel for the elastic doesn't start or stop at the outside edges of the bag. It is put into the channel from the inside. That is why the right edge of the bag isn't stitched closed until later. and the 7" are on each end is flat.
You see in step 8 that the elastic in the channel is shown still parallel to the bag's long edges. The short edges of the bag are folded onto the bag's lining side and stitched down to form a casing on each bag short side. The outer short edges of this casing is open / extends from edge to edge to form the channel where the fabric straps do pass all the way through the bag. If you keep your bag in position like Step 8, you will insert one strap into the channel on the left from the top to the bottom. You then tie the ends of that strap together to form one side of the bag.
When you wear / carry the bag.....the elastic enclosed into the channels keep the long sides from gapping open and you will cinch the short edges of the bag along each handle. I believe that the diagram in step 9 is wrong in that the location of each of the six fabrics is wrong. The position of the fabrics that show in diagram 8 are not in the same spots on diagram 9.
Let me know if you still have questions. Maybe I can see photos or further answer your questions.