I have not made this purse, but I think I may try it for Christmas gifts for my 3 DGD. What has you stumped? It looks like you attach the top zipper upside down to the striped strip so when you fold it back it will be right side up. Then sew the lime green 8 1/2 x 7 inch lining to the other edge of the zipper. It looks like Diagram 5 is the wrong side of the purse. Hope I was helpful and didn't confuse you even more. Keep us posted. Sometimes I have a problem picturing how to attach a part of the pattern--my brain just doesn't picture it.
Sue