I'm not familiar with that guide, and as I've never heard of WoundedKnight and been here over 10 years, I suspect that is a very old guide. Not saying its a bad guide, but many old strategies have been disproven or improved over the years.
The problem with simply saying "build farms", is that the workers may have far more important things to do than building regular farms. Key order of worker improvements are food specials > chopping > the rest based on needs/land > road connections, if needed > maybe a mine. Regular 3F farms may only be necessary if a cap has bad food to start with like plains cows or something. But generally most starting positions have 1 or 2 strong food specials.
The key here is that FOOD=PRODUCTION, thus, your main source of early production is converting food to hammers via the whip. Happy and health limits are relative. Well, health is totally unimportant, and happy is just something you manage and work around early. Because you are going to whip settlers and workers and then granaries and a library.
Now that doesn't necessarily answer your question about economy, but economy is not your first concern in this game..that concern is worker management, production(food), and expansion. Cottages will come, but they are not the first priority.
My assumption is you have limited experience with the game. Reading old guides may provide some good info to at least get acclimated to the game, but there can be outdated info in them. The best way to learn is doing what you are doing now - asking for advice, But even better is positing a shadow game (standard maps, standard settings, no huts/no events) here and get advice from Turn 0. The early game (first 100 turns) is key to success in with Civ IV and mastering it should be your first priority. Economy will come, and is often the most misunderstood and over-inflated component by newer players.
In addition, for now, I'll address a couple of your other points just to get them off the table:
1) City specialization - this is a bit outdated concept as well..not completely irrelevant, but again, something I would not overthink at this stage. The most important related concept is the Bureaucracy capital (cottage capital), but not all starting positions are created equal.
With that said, "playing the land" is important, and what should be your first concern is simply settling good cities...i.e., food in the first ring.
What the city specialization concept ended up doing for players, including me for a long time, is hamstringing them into a certain way of play such as farming everything in one city, cottaging everything in another, building mines in another without really giving thought to better things those workers and those cities could be doing...especially early on.
But yes, land can very much play are strong role in how you do eventually improve a city, but keep in mind that for quite some time cities are going to be relatively small regardless..and they will be whipping, or running scientists.
2) Fresh water is nice but not important. I don't settle cities based on that factor. I settled based on food....or in some cases a strategic resource or Gold.
3) Coastal cites? - Well, that is certainly map dependent. On some maps they are completely irrelevant. On others that will be basically all you settle. Coastal is not a "settling decision priority" in a general sense. In fact, regardless of map, if my start position is coastal I will often try my best to move away from the coast if feasible.
-resource. Indeed, sometimes the land is so bad you need to do it, but it's a rare occasion.
