I struggled with Ualaa's guide too, but honestly everything he says is correct (I have dynamic formations working).

I'll try to summarize the highlights of the system.

Your toons belong to a particular action target group (ATG). In Ualaa's example he called the ATGs A, B, C, D, or E. I'll keep the same naming.

I have a keymap under "Control" that is called "Slot 1 is Leader". Every time I switch to this slot (by clicking on my window that has the first toon in it which causes it to be the "big" main window), this key map is activated. All this keymap does is assign my different toons to the different ATGs. First, all toons leave whatever ATG (A, B, C, D, or E) they're in so they can be reassigned into a new ATG.
The toon in slot 1 goes to ATG A
The toon in slot 2 goes to ATG B
The toon in slot 3 goes to ATG C
The toon in slot 4 goes to ATG D
The toon in slot 5 goes to ATG E

Similarly, I have a keymap called "Slot 2 is Leader". When Slot 2 is activated (by clicking on the window) the toons leave their ATG and join a new ATG.
Slot 1, Slot 2, Slot 3, Slot 4, Slot 5 all leave all ATGs A, B, C, D, and E
The toon in slot 1 goes to ATG E
The toon in slot 2 goes to ATG A
The toon in slot 3 goes to ATG B
The toon in slot 4 goes to ATG C
The toon in slot 5 goes to ATG D

Now I have a "Spread Out" keymap. All this does is tell whoever is in ATG A to not move, ATG B to move to the left, ATG C to move back and to the left, etc. Since my toons have been assigned to different ATGs depending on who is leader, they now move the way they're supposed to, causing a dynamic formation.

Again, Ualaa's steps are perfect, but you have to be comfortable with ATGs.