First tip is this: Do not cut the inner pages individually. I used computer paper folded in half then laid the paper over the die with the fold just inside the cutting edge. I cut three folded pieces at a time this way. (For the book pictured, I used 9 pieces of computer paper for the inside pages, cutting three at a time.) Now cut the spine.
It will look like this from the back side
And like this (die and paper side up) when you place it on the cutting mat
Now lay the cut pages, nested together, with the spine on the outside. To hold the spine in place, I used temporary adhesive, and to keep the papers from shifting I used binder clips so they would stay lined up evenly. Using a ruler I made a light pencil line down the center on the fold line so I could see it easier in the sewing machine.* Now sew the pages together using a medium to long stitch length.
*If you do not have a sewing machine, you can sew the pages together by hand. Use a paper piercer to puncture stitching holes all along the center fold.
At this point you're already ready to add the cover. If you don't want the stitching to show on the outside of the book, you can cover it by adhereing another spine over it.
Rub off the temp adhesive from the spine now that it is sewn in place. When you add the cover, lay it over the pages so it extends slightly beyond the pages, then adhere it to the underside of the spine. Repeat this for the back cover lining it up with the front cover before adhereing to the spine.
You can see the spine accomodates quite a few pages by doing it this way. I'm sure I could have added more and still been fine.
Now just add your label, embellish the cover if you like, and you're done! This paper is so cute I didn't want to cover it up so I put the label on the inside front cover. :)