Could you give us a link to the tutorial you're using? Often when people are having trouble while following a tutorial, it's because the video is going too fast or you can't see the keystrokes which the author is using, or something like that.
I think I have a 0.48 version, so I could probably help.
(In the current stable version (0.92.2) I think all the extensions include tips for how to use them. But in 0.48, certain extensions will only work if you do things in a very specific way or order. The extension dialog doesn't give you a clue, like it does now - only the manual)
I'm straining my brain now, but for Interpolate.... No, I don't think there's anything special. You just select both objects....I don't think Groups are allowed. So let's say select both paths. They have to be separate paths, and not 2 subpaths of one path.
For testing, I would set something like 5 steps. Because if the file is very large, and you're asking for hundreds of steps between the original paths, it might just be taking longer than you expect. So for testing, just try it with a few steps.
Also, 0.48 also has a bug which might cause the results of the interpolation to appear anywhere on the canvas, even outside the screen area, even in a brand new blank file! To avoid that, create a new layer, and move the 2 paths into that layer. Do you need instructions for that?
What Moini means by test file, is create a new SVG file which has only the paths that you're having trouble with, and tell us the exact steps you're taking, so we can try to reproduce the problem. Or else make a video so we can see what you're doing.
I'm not going to need that, at least not yet. I want to see the tutorial first. And then you can try my tips too. If we're still stuck, I'll might ask for a test file.