This is also a very straight-forward step. nLite is asking for the location of the downloaded Service Pack

The Service Pack is the hefty file that should have been downloaded a few pages back

The moment you click OK, Service Pack Integration begins. The Service Pack integration is actually done with a Microsoft-supplied utility named "update.exe" that comes with the Service Pack. While the utility works its magic, the nLite window merely says "Slipstreaming...".

You will see a series of windows show up, which are all a part of the Service Pack integration process. The first stage is an extraction process, which extracts all of the new files into a randomly-named directory on one of your partitions. The second stage is the actual integration of the new files into the installation sources. The third stage is just an informational window informing you that the integration was successful.

After integration is complete, nLite re-analyzes the installation sources and reports the new Service Pack level.

Click Next to continue.