That is the guide I used and is the best guide but it is very terse and doesn't tell you an inch beyond what is absolutely necessary.
If you get stuck, search very specific keywords in this thread, you have to dig, its a bit of work but you can find what people did previously on their own play through. Some parts of the game are admittedly very cryptic, and the area with the cats I believe i spent 6 or so hours trying to figure out a very basic thing in regards to it which I didn't even need in order to achieve the true mercy, truthfully.
Funny, I just read your specific problem, have a feeling you are not talking to the oni merchant in the upper right corner of the screen (its kind of hidden you can't see the merchant unless you walk in that area, VERY DECEPTIVE) after the 1st or 2nd cutscene with the cats. you need to talk to the Oni Merchant and get to. And then after that you can go back and do what you need with the cat demons they'll figure out you uh, yeah, and then you've recruited them and can move to the next area.