Okay Lets take this one step at a time cause your getting confused here. I answered your question.
1. You edit your ubbt_instant_ubbcode.tmpl this puts a link in your newpost and newreply pages to the java 7photo panel.
2. The directions state that if you have the quick reply mod there is some extra steps OTHERWISE your done. If you are not familiar with the quick reply mod it adds a quick reply box on your showflat and showthreaded screens. This has a link to the graemlin panel and if you do the other steps in this mod will also add a MY PHOTOS link so users can use this mod there as well. However just as the instructions state if you do not have quick reply installed your done.
Do you understand? Just as it says if you do not have quick reply installed your DONE.
You only need to modify the one file ubbt_instant_ubbcode.tmpl
