The Try It Out exercise on pg 58, Work Offline with a Document, walks you through checking out a document to work on it offline, but I can't find the Local Drafts Folder that it created and put a physical copy in. The exercise doesn't explain how to retrieve the document after it's been checked out. Any suggestions?

The default location is in the My Documents folder, however the "drafts" folder may be hidden. I would ensure Windows Explorer is set to show hidden files and folders. (tools->folder options->view

Hopefully that helps!

found under My Documents\SharePoint Drafts