Lofting in 123D can be very simple. I first was very confused because the program thought that my sketch was a path. If you see a starburst like icon next to your sketch and it has anything other than **profile** in the text box, then click the star and select swap. Then everything should work just fine. Don't forget to use the OK operation to complete the Loft.
I'll show exactly what the sequence should look like in the "What Not To Do" step, but if you understand the Combine operation, then you can jump right in.