Yes - that is pretty much correct. In STEP 2 you can put in almost anything and this will be the name that WP uses to create the new site. Make sure that this name does NOT contain the Site Name of the site selected in STEP 1. The cloner has to automatically replace values in the database and if the name in the Title field of General > Settings for the origin site (STEP 1) is something like "Site" then the value in STEP 2 cannot be "site". Hopefully that makes sense.
Also, if you are using Domain Mapping, make sure that it is turned OFF or is NOT configured for the origin (source) site you have selected in STEP 1 when you clone. Otherwise the new site will have the domain mapping settings from the origin site and it will throw things off.
Once you've cloned the new site, then you can go into it's domain mapping settings and set that part up.
Hope that helps!