Forget my last answer, I found the exercise and saw what it wanted.
On the third step then you wrote
cat > islands.txt, the exercise is simply asking you to output the contents of islands.txt using cat. To fix this then just take out the > sign.
What I usually like to do is mess around with exercises after I've completed them so that I get a better feel for the code, which is what you can do too Hope this helped.
cat volcanos.txt | wc
you got an [output] to your screen
17 26 204
and as you want to redirect the [output] into a file
you would use
cat volcanos.txt | wc > islands.txt
The answer is
$ cat islands.txt | wc
Took me forever to figure it out.