Creating links to old posts

Here's what Blogger has to say about it:

Permalinks are created in two steps. First, a unique identifier is applied to each post using an anchor tag, like this:

(a name="($BlogItemNumber$)") (/a)*

This should go somewhere in your post body. If you include it in the itemtitles section, your post will only get numbered if you specify a title.

Second, you need to display the permalink for each post. This is usually done in the footer and near the author name:

(a href="($BlogItemPermalinkURL$)" title="permanent link")#(/a)*


* I've substituted ( ) for <>

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In the first step, do I simply cut and paste? Which part of their code example do I replace, if any? With what?

OK, in step two, this goes in the template, correct? Again, which part of their code example do I replace, if any, and with what, to have it locate the actual post? All I could figure here was the copy for the link replaces the #.

Thank you!