The instructions aren't as clear as they could be. You put the "} // if favorites" in the right place. Did you put the "if ($favoriteonly == 0 ..." stuff in the right place? (Note the "ABOVE" instructions, in the snippet below.)

// #######################
// Step 5.
// Find in index.php
if ($getperms[canview]==1) {
// then add following codes ABOVE it (NOTE:ABOVE!!)

// ===Start of My favorite code===
if( $favoriteonly == 0 || ($favoriteonly==1 &&
$selarray[$forum[forumid]]=="T") ) {
// ===End of My favorite code===