Step seven

So you have your heel flap and turned heel, but now there's two edges which have no workable stitches, nor any needles. In this step, we'll pick up stitches along those sides, and manipulate everything until we have 3 needles, again ready to knit in the round.

Hold your heel flap like this.. note that the ribbing is to the left, and your working yarn is ready to be used at the right:

Now, take a good look at the slipped stitches (abbreviated as SS) along the edge. (SS's are the elongated V's.)

Find the first SS closest to the needle on your right.
Insert your working needle through BOTH sides of the V from bottom to top.

Wrap your working yarn around the working needle just like a knit stitch, and bring the tip through the SS so you are actually knitting it. You'll have a new stitch on your working needle. This is called picking up and knitting, because you pick up a "pseudo stitch" and knit it.

Now we're up to the two original needles that hold the ribbing.
Combine these stitches onto one needle, and then knit across.

And now you have used four needles, and it kinda looks neat, huh?

Moving to the needle that holds your turned heel, knit exactly half of the stitches to the needle on the right (using the right needle already holding stitches), slip the other half to the needle on the left.

IMPORTANT!! When slipping the other half, slip as if to knit! NOT PURL. Since we’re now moving them in the opposite direction, insert the LEFT needle into each stitch as if you were knitting it, and slip it off.