I'm stuck at part 1 in your instructions because it says on the website "2. Right-click on the unallocated space and select New simple volume option to see New Simple Volume Wizard. Click Next to proceed." I don't have a "unallocated space" on my USB for some reason. It's all blue. Thanks for all the help!
You will be installing Ubuntu onto the PC harddisk and not on the USB. Right click on the C: drive to shrink it.