I reported the instruction confusion in the features community, but thought I would post my error here:
Friendly URLs do not work on my installation. There are confused instructions as to where the friendly URL actually is here on ellg.net and on all installs. On the Account settings page, it says friendly URL is located:
http://elgg.net/home/[yourfriendlyname]/ (this is correct on elgg.net)
But on the submission results page, you get a message that says:
http://elgg.net/~[yourfriendlyname]/ (this is incorrect on elgg.net)
On my installation, neither of these works and both result in a 404.
Keywords: bugs, error, friendly url

Comments