So my wife gave me this mini Bonsai book and seed packet for Christmas. I finally got around to sowing it a couple weeks ago. I have followed the directions to a T, but now I am confused.

step 6-Set tray in a North or West facing window until seed sprouts---Check
Step 7-After plants have grown, remove weaker plants and leave one strong plant---Only got one sprout Check

Step 8-Place tree outside in dappled sunlight for one month and then move to dappled sunlight- Ok, so I am assuming this little guy is in no way ready for anything but my window sill. Do I just leave it as is in the little peat pot? How long and how big?

Step 9-During the following Spring, repot into 100% bonsai soil. Again, should I leave this guy just in the peat pot till next year? Seems like this little peat pot gives no leeway in terms of a missed watering and it drying out.

Thanks!

I would plant the whole thing, including the pot it is in now, in a small plant container. Then move it outside.

It is way too wet now, and pines -which this seems to be- need light. Inside is way too dark. Just do it gradually. Else it will get sunburn.
Plants grow outside. Not inside. So also seedlings germinate outside. Not inside. I do not understand why everyone is sowing them inside.

Thanks for that. Just regular ol potting soil/mix good?
I sowed inside cause I don't know what I am doing and the instructions said so

The challenge with the soil you have now is that it is very dense, and stays wet. The latter will be the same with potting mix. These sets are really not ideal tracks to start bonsai. It is not alway easy to get these going from seed to 2 year old.

Alternative would be to plant the whole thin you have there in the ground.

It all depends a little on how much experience you have growing stuff. There is a lot that can go wrong, especially if you are out of your comfort zone, I am afraid.