I think you may have misunderstood what I was saying ... I wasn't saying you should not try to have "multiple webmistresses", only that the process you were investigating in that post is not the best way to attempt that - particularly in light of your current understanding of what is involved. The process you were investigating is just the wrong way to go about accomplishing that.
Installing a CMS system (like Joomla! or WordPress) is the best way for you to do this!
This is where you tell the one-click installer what it needs to know so that it can install the application into your account in the way you want it.
Well, I'll give it a shot:
1) "Install to:" - This is where you want the application (in this case your WordPress site) to "live" in your account, which determines what url will be used to reach it on the web. If you want your WordPress "site" to automagically load when someone goes to your domain (http://crash-into-me.net) then you can just leave the setting as suggested. If you wanted it to be found when someone browse to http://crash-into-me.net/blog, you would add "blog" in the second box, etc.
2) "Create a database to use" - just pick a name (anything will do) for the database that will be created to use with your WordPress installation (something like "crashintomedata" is fine)
3) "Create a new hostname" - is just a place for you to set the name that will be established for the "host" connection to your database - the default of "mysql.crash-into-me.net" is fine, but you can replace the "mysql with something else if you want (I recommend just using the suggested default)
No, that is where you define the "user" that will be able to connect to the database you are creating, and set what password to use. This should, for now, be you (though you can latter add a co-webmistress if you want as an additional user). Note that this has nothing to do with the other webmistress being able to add content to your site, only with being able to directly manipulate the database. I recommend not setting an additional user here, beside yourself, until/unless you and/or your co-webmistress determine there is a need for her to access the database directly, and she knows what she is doing.
After the WordPress system is installed, you can then add your co-webmistress to that system as an additional author (using the WordPress administration tools when you are logged into WordPress as the administrator).