John!!!! Your instructions were almost impossible to follow! LOL!!! It took me awhile to figure this one out!
The idea behind this technique, is to mask a shared color between the two letters. If you look at the original logo and examine the U and the S, you will see that there is a shared color of the overlaying area and that is Purple!
I start by creating all the letters, each on their own layer, and arranging them to be in their final position.
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Note that they are in a specific order. Their layer position starting from the bottom is Orange S, Blue U, Purple C, and yellow T.
I then worked on the letters two at a time. Since the U is overlapping the S, I duplicate the U layer and change it's color to the shared color between these two letters which is Purple. I then select either one of the S letters by command + clicking the thumbnail, then I make sure the Purple U layer is highlighted and I click the layer mask icon.
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It will now look like this.
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Repeat the above steps for the Yellow T and the Purple C. Remember, duplicate the overlapping letter and change it's color to the shared color.
It should now look like this.....
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Will finish in next post.....