I'm not clear on the directions you describe, but to use automatic syncing, you need to set up the shuffle's Music tab in iTunes.
Select the shuffle in iTunes. There is a row of "tabs" (starting with Summary). Click on Music there. On this Music tab, you tell iTunes how to sync songs to the shuffle. If the shuffle is currently set to use automatic syncing for songs, Sync Music is already checkmarked. Below that, you can choose to sync your Entire music library, if it will fit. Otherwise, you can chooise to sync Selected playlists, artists, albums, or genres.
if you choose the latter, below that, you create a selection of songs based on checkmarking playlists, artists, albums, and/or genres. For example, if you want the songs from one or more playlists, look on the list below Playlists to find and checkmark the ones you want on the iPod. When you Apply the changes, those playlists and the songs on the playlists are synced to the shuffle.
Going forward, any change you make to the selected playlist(s) sync automatically to the shuffle, when you connect it or click the Sync button.