Finally he turns the whole thing right side out and the insulation is supposed to now be in the middle and he then sews the last seam.
I can't see how the insulation gets in the middle. What am I not seeing here?
Easy, if you do it 'right'
Slip your hand between the two fabric layers, hold on to the the material furtherest from the open end and with your other hand, push everything away until your first hand is on the outside.
The 'wrong way' is to slip your hand between the insulation and the fabric. Doing it that way you end up with the insulation still on the outside.
You can do a trial run with 3 scraps of material labeled 'shell', liner and insulation.
One variation you might consider is to sew up 3.5 sides instead of 3. Just make sure the open part is large enough for your arm and a little more. Have the open section in the middle of the 4th side. It'll make all 4 corners neater.