In reading the instructions you were given. Based on my experience with Puppy and Vector Linux, I'll advise the following:
Puppy doesn't have the run levels and all that. I think, just boot to the command prompt using the puppy pfix=ram,nox argument.
I've haven't installed VL with using Live, but my guess is:
1) that you'll want to have a target partition already available for the install
2) you'll download the .iso to a different partition
3) that you'll want to have quite a bit of space for the kernel code, compilers and all the extras you will want on the target partition
and I could be wrong, but best of luck to you