Heh that's ok, I was mainly setting that up for my own notes. Ignore that part for now, we'll get to it later.
The main game takes place in the dream about a D&D3.5 setting, which is a fantasy world medieval technology, magic, wizards, dragons, orcs, etc. Mainly about a tribe fighting for their place in the world while dealing with natural disasters, shadows, and lesser demons. This is where most of the game will take place. Players will play as a D&D3.5 character, which will be their dream persona for this setting, and we'll be using D&D3.5 rules for it.
The dreamers may occassionally wake up, which will end their involvement in that setting, until they go to sleep again the next day, in which case they can re-enter it, though time and events may have moved on a bit in that setting since they were last in it
(by about 16 hours or so, just because. Sometimes more, sometimes less than that.)
There may be brief posts about when they are awake but I'll usually leave that up to the players.
The world outside the dream is the modern day world, characters are likely students taking a course in psychology at a university.
In terms of character creation, since you said you wanted to learn D&D3.5, the main thing to start with is to create a dream persona for the fantasy dream setting, a D&D3.5 character.
At the top of the page click Sheets > then click New sheet > then type in what you want your character's name to be next to where it says "New sheet", click on Type and change it to D&D3.5e, then click create. (There will be a little box saying Public? with a green tick. You will want it to be Public so that other people can see it, so just leave that ticked
Once you've clicked create, your new character sheet should be created, so scroll down until you find it, then click on it.
Should look something like this:
Pick a class
from the following: barbarian, bard, cleric, druid, fighter, monk, paladin, ranger, rogue, sorcerer, wizard. Type that in on the sheet just above where it says class.
If you don't know what to pick, just pick one of them, you can always change it later before the game begins.
Then pick a race
from the following: human, dwarf, elf, gnome, half-elf, half-orc, halfling. Type that in just above where it says race.
Scroll down to the bottom and click Save Changes.