After much fussing, and following the directions from the book, I managed to create the Lion Banner. I changed the arrangement of the items within the graphic, just to experiment with the process. This is the result of my labors.

Here, I used the sailboat.psp file to add the reflection to the water using the layers of PSP. I must say that this was even more fussy than the Lion. I followed the directions in the book to no avail. So I experimented on my own with layering the sailboat picture, and FINALLY was able to produce a passible product, below.