No aplogies necessary. I will try to clarify things for you.
First of all, not only did I backup my database, but I did a backup of ALL of my WordPress files. These files were copied FROM my web server TO my own computer here at home. Then, once all of the backups were completed, I deleted everything in my WordPress folder on my web server. I didn't delete my database, of course.
For Step 2, I opened up the wp-config.php file which I just backed up, because it has all of the necessary information for the database connections. I had previously unzipped all of the new V. 1.0 files onto my hard drive, in a separate folder. I opened the wp-config-sample.php file from that folder, and updated the wp-config-sample.php file to be EXACTLY the same as my backed-up wp-config.php file.
So, to summarise:
I have a total WP folder backup.
From the backup, I openend wp-config.php.
I copied the necessary information from wp-config.php to the new wp-config-sample.php. Then I upload all of the files to the web server.
Now that all of the new WP 1.o files are uploaded, I need to have a wp-config.php file ready when I run the upgrade.php script. The only file on the web server that has the correct information is the wp-config-sample.php which I manually changed in Step 2. I simply renamed the wp-config-sample.php to wp-config.php. This does indeed mean that wp-config-sample.php does NOT exist on my web server. I still have the file locally on my own computer.
I hope that this helps. If you would like any more clarification, then please do ask, and I'll do what I can to find or give you an answer!