Perhaps the 2g install will be easier to understand.
http://vfaq.com/mods/clutch-2G.html
I can't tell in your picture. Is there a seperation under your blue line? Honestly it's been a while since I've done this. I'd go out and look at mine but I bet it's still hot out....
If you want to get a good idea of what the mating points between axle and tranny are just pull the drivers side one first. It doesn't need to be pried.
And wear gloves. Knuckle busting is inevitable.