First thing you will want to do is take a deep breath. I, too, found the book very confusing. However, once you wrap your head around it, it is quite simple. The short version is to complete steps 1-11 with your student. Then switch your focus to the WISE Guide. It gives you everything you need for your lesson plan. The red book becomes a reference.
LONG VERSION (after you have prepared your material and started your learning log)
The first thing you have to do with SWR is to determine if you child is ready for it. Is the student aware that language is an object that can be analyzed and manipulated in different ways? This would include being able rhyme or to pause between syllables in a word. This is phonological awareness.
The next development stage that must be reached is that the student can hear separate sounds of a language, not just the words or the syllables. She should be able to hear, identify, and manipulate individual sounds in spoken words. This is phonemic awareness.
If your student has reached these two milestones, you are ready to move on with SWR. These two skills are important to check for all ages.
If your student is not a beginner, you will want at this point to give the Diagnostic Test found in Appendix B. Don't worry about where he/she will place. That will be done in Step 11. Just give the test.
Whether you have a non-beginner or a beginner (who you have determined is ready to begin), you move into teaching how to read and write the first 26 phonograms (and the numbers). Obviously an older student is going to probably know how to write the alphabet so you just have ensure she knows the sounds. There is a specific method for teaching the phonograms which is part of why SWR is so successful. I found that learning the "method" is much easier when working with a mentor than trying to absorb it from the book. But if there is no one in your area, we will help you in any way we can.
Once your student knows how to read and write the first 26 phonograms, it it time to introduce the Learning Log (step 8) and to teach the Vowel/Consonant Reference page (step 9). There are explicit instruction in the red book on how to teach the reference pages. The C/V chart actually accomplishes several things. It teaches 4 rules (#s1-4) and introduces the student to the word dictation process and the marking system.
NOTE:There are two types of references pages taught in SWR - Teaching pages and Collection pages. The WISE Guide tells you when to introduce both types. You don't worry about adding to collection pages from the lists until that type of page has been introduced as instructed in the WISE Guide. Once a page has been introduced, the WISE Guide will tell you to add certain words from a list to the collection page. (Example: The WISE Guide Preliminaries for Section E instruct us to Start the "SH/TI Page". Then in the body of Section F on the righthand page (under shot) it says to add "shot" to the SH Page. You will see this all throughout the WISE Guide.)
The Consonant/Vowel Page is a teaching page. The next reference page, Multi-Letter Phonograms, is a collection page. You will begin filling that in when you introduce the multi-letter phonograms throughout WISE Guide Sections A through I-1. Again, these instructions are all given in the WISE Guide Preliminaries.
You will now use the test given in Step 4 to correctly place your student in the WISE Guide. You want to find the first word missed. Then back up one word and follow it across to find the starting section. There is a chart in the red book on page 65 that helps place a student new to the program. If you aren't sure which level is best, ask someone.
Once you have placed your student, you are ready to begin daily spelling in the WISE Guide (step 12) using the Learning Log. The red book is no longer your focus. All the lesson plans you need are right in the WISE Guide. You will use the red book for reference to complete the steps as they are assigned in the WISE Guide.
The Learning Log is an essential part of SWR. That is where your student is ungluing and gluing words and starting to absorb the phonograms and spelling rules until both become second nature. You will teach the rules through the reference pages, and they will be reinforced as you come across them in the word lists. The student then isn't just learning an arbitrary rule but actually has a word to apply it to and so it makes more sense. The more words they learn, the more the rules become second nature.
For me, the actual word dictation process was best taught in person. (If you are familiar with Charlotte Mason, this is NOT that kind of dictation.) You teach your students how to spell each word. There is no guessing. If there is another experienced user in your area, she could be great to connect with. It was very helpful for me to see the process modeled and to see how all the senses are used and the importance of each step. There are many things about SWR that are customizable, but if you want the best success from SWR the dictation method for the Learning Log words is one of the "DON'T CHANGE" things about SWR. So it is important to make sure you understand how it works.
I hope that helps those of you who are struggling. SWR is truly an immersion program for both a new teacher and student. But if you can step away from the big picture and take it in bite-size pieces, I think it will start to become clearer. I know how hard that is as I am a major big picture person, but it does work. Give yourself time to process this and then come back with your other questions. Feel free to ask for clarification on anything.