OK, I figured it out! I’m not sure if I attacked the problem the right way, but it worked for me. I started by turning the scarf completely right side out. At that point I was able to look into the scarf from either end and see the unfinished ends of the loop that needed to be finished. That gave me a great visual to understand what needed to be sewn together, and from there I was able to position the fabric correctly so I could sew up the ends of the loop.
The scarf turned out great! Sophisticated, yet so adorable on my 3 year old. Instead of fringe, I finished the ends with a small ruffle done in coordinating fabric. I wish I could post a picture, but we are having problems downloading from our camera. That’s another problem for another day. 🙂
Hope my description is helpful to those who may get stuck on this step in the future. It really is not difficult, but I have a difficult time visualizing from time to time. I’ve already stared on scarf #2!