Here's what the heel looks like once all the stitches are worked.
When all the stitches on the heel needle(s) have been worked there should be yarn-overs on each side of heel needle(s). Decrease these yarn-overs with a stitch from the instep needle(s). Now continue knitting in the round. I suggest counting stitches to make sure you still have the right amount.
I wrote this brief "tutorial" to give fellow socknitters a quick overview of how to work short row heels. As I mentioned previously, I suggest finding a copy of "Simple Socks Plain and Fancy" by Priscilla A. Gibson-Roberts for more detailed instructions.
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