How to use "add/subtract/intersect from path/shape area" effectively in Photoshop?

I'm attempting to follow the below Photoshop tutorial, but steps 29 and 30 have me stumped.

The larger of the two white rectangles in the below image was created on its own layer. Once I have that layer selected, it's actually impossible to carry out step 29, as the "Add to shape area" button is greyed out on the tool bar. I can only do this by first making the black rectangle on a new layer, then subtracting the inner white square from that...

Relatedly, I have no idea how to do step 30. This is for a pencil icon to place within the square just created, but it does not specify what layer this should be made on.

Is it possible I should have Paths selected rather than Shape Layers at the top? I've tried this, but it didn't seem to do the trick. Once I created a work path, I didn't know what to do with it in order for it to add or subtract from the below layer, nor how to add more paths and be able to manipulate each individually (in the case of the pencil icon...)

Any help here would be greatly appreciated!!