What do you expect to happen?
You create an Image, then double-click on it to mount the image. It will ask for a password if you have not set it to remember in the Keychain. The image will mount as a Disk and show up wherever you have the Finder set to display disks.
You can then use the disk just like any other hard drive. Eject it to re-encrypt.
The details are in the article you referenced.
Assuming you want a 100MB image that mounts as "Disk Image," you are currently on Step 7. Choose a format.
Read/Write will use 100MB of disk space and you can read and write to the disk. If you want it to only take up the amount of space that is used on the image, use sparse disk image.
If you want it to work efficiently with Time Machine, use a Sparse Bundle disk image.
Step 8: Pick the encryption type. That's up to you. 128 is sufficient. 256 is better.
For the partition map, what you chose is fine. You could also use Hard Disk or single-GUID.
Step 9: click Create.
Without you asking specific questions on what you don't understand, it's pretty hard to provide you with more than is already in that article you referenced.
Enter and verify a good password in the dialog window that appears. This password will be saved in your keychain by default, or you can deselect "Remember password (add to keychain)" if you don't want it saved. You can store the password in the keychain for convenience.
Did you store the password in your keychain? If so, then it will enter the password automatically.