I just followed these instructions with no problem. I am using 2.3.0-rc2.
Your assumption is correct: root directory of the tracked site is the root directory of the target site, moolah site, blog site - not your Piwik server site.
When you refer to “pw” as your install, you are referring to the folder name on your server site as in “http://piwik-server.com/pw/”? If so, then you update that in the piwik.php that you downloaded in Step 1 of:
I verified that Piwik was working by visiting one of my sites using a less-popular browser, clicking Refresh in the Visitors in Real-Time box and seeing my visit being tracked.
It appears the m-word is banned so I had to use “moolah”.