Can't help ya with step 38, sorry, but maybe in a week I'll have things running properly on my end. Hopefully Coyote has a go for ya tho. Put up a screenshot so I can see what's what and that will help me much better. And don't worry about the frustration thing, when I was first learning Photoshop years ago and following tutorials I always messed them up so you're not alone there. I think everyone who has ever followed a tut has messed one up somewhere in the past. To this day I still can't make those shiny little ball things everyone else makes so well and I've done those tuts hundreds of times.
i've got the tutorial loaded right now, i'll take a bit of a break from my current map and work it over and report on step 38 ;)
Well I went through up to step 38, I can't replicate the issue you describe.
Have you tried just saving, closing out PS, then reopening the file? I've had a few times where the program acts incomprehensibly to me, and it turns out it's been a program error.
Can you post a screenshot? if you can include the layer palette that might help too.
*note - these mountains will look very different to yours, I was playing around with a few techniques that I've always meant to try ;)