OK, I think you have done everything right so far, but let’s back track. I don’t have photos to hand but maybe more words will help…
Step 1: You’ve cut out an inside handle piece from interfacing. On that interfacing you’ve drawn the hand hole and then cut it away so the interfacing has a hole in it.
Fuse the interfacing to your fabric.
Step 2: Now put the interfaced handle piece on top of the main panel with right sides together. Align the outer curve as in the picture.
Now stitch the shape of the handle hole. This is what is being referred to as the “centre edge of the handle” it’s what I think you’ve done and it’s completely correct. You will be stitching the handle fabric to the main panel right along the line of the trimmed interfacing. It WILL work, trust the instructions. 🙂
Step 3: Cut a hole within the perimeter of what you just stitched. Start in the centre then trim away the middle of the handle shape leaving only about 1/8″ seam allowances and clip into the curves. Illustration shows this.
Step 4″ The hole referred to is the one you’ve just made by trimming away all the fabric from the inside of the stitched handle shape. You’ll turn the pieces you’ve just sewn right side out using this hole.
Best of luck.
Edit: can a moderator please move this to the Little Things to Sew thread. Thanks