You don't necessarily need sides - particulalry messenger bags. I guess in totes sides are kind of necessary because the bag needs to stand up straight. With messengers (like the one you are making) its going to be slung around your body for the most part. I don't think sides are necessary.
As for handles, just sew them onto the outside of the purse. If this is your first bag its much easier to attach the handles after you have constructed the body of the bag. Hope this helps!
mebsmommy is right. The gusset is one long piece. You need to place that bottom edge of the gusset pattern section onto the fold of your fabric so that you end up with a piece of faric that is double the length of that shown on the pattern.
It looks like they use bias binding to cover the top raw edges of the purse.
To get the lining you need to cut 2 of the bag section pattern. Looks like they are just using this section of the pattern as the lining and not including the gusset in the lining.