Step two is wrong. Distribution doesn't work across multiplication, only addition. [spoiler]a(b+c)=ab+ac but a(b*c)=abc[/spoiler]I have no idea wtf textbook you're using that has that in there.
EDIT: I realised that this likely isn't from a textbook, but my point stands. Wherever you saw that "how it's supposed to be done" is wrong, both with the distribution, and where they said that "x^(n-(n+1))=x^1". That doesn't even make any damn sense.
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I will attempt to solve it in my 3AM haze. Prepare for a stupid mistake. NOTE: I'm going to assume that x does not equal zero, because then solving this req's more writing that I don't want to do. (x^n / x^n+1) / [x^2 * (x * x^-3)] (x^n / x^n+1) / [x^2 * (x^-2)] (x^n / x^n+1) / [x^0] (x^n / x^n+1) / [1] (x^-1) / [1] = x^-1
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Also, this is assuming that "x^n+1" is actually "x^(n+1)", just written poorly.