5. Select "Yes - Install CWM-SuperSU-v0.97.zip"
6. Select "Go Back"
7. Select "reboot system now"

5. fastboot erase cache -- this will erase the cache -- might not be necessary but it's just as a precaution.
7. fastboot reboot -- this will reboot the device.

After Android 4.2 is loaded and running the SuperSU file must be copied from the "Root" folder to the internal storage (shows up in Windows Explorer as a Nexus device). A simple copy and paste will do the trick here.

Then you have to power off the Nexus device and enter "fastboot mode" again. Use the Volume Up and Volume Down keys to navigate until you can select "Recovery Mode". After the power button is pressed the device will reboot in the new custom recovery.

I use this http://www.wugfresh.com/dev/nexus-root-toolkit/ to flash to 4.2 and root it. Just follow the guidance.

When you reach step 7 , just select NO or go back will do fine

And why follow such a complicate and long winded guide
Just use the NExus 7 toolkit - you will be guided fully or use Wugfresh
This guy who writes the post is only confusing a lot ogf new users
Use the N7 toolkit and you need not even need any written guide

http://forum.xda-developers.com/showthread.php?t=1809195

I just follow this guide to root/and have CWM installed on the latest ver 4.2 though his guide is not updated yet to have it working on ver 4.2. It still works very well