Frankie - to get the magic 'Convert to track' button in Potlatch, you need to go to the GPS Traces listing, then click 'edit' next to the track in question -
not the tab at the top of the page. You'll then see a 'Track' button once it's loaded.
You can then chop and change to your heart's desire. I usually remove any stray points or clumps where I stopped, add connections to neighbouring roads, and cut and delete any places where I've gone over the same ground twice.
Finally, select the red track and click the little padlock to 'unlock' it (bottom left). When you deselect it'll be uploaded as usual.
If it doesn't let you unlock, it'll be because the way is too long (200+ points) - you'll get a little message warning you if this is the case. In that case, just split the way into two individual bits and unlock each one.
But, all of that said, if you're doing a housing estate with lots and lots of little connections, I wouldn't bother with any of this: I'd trace over it all manually. The automated track convert is great for long minor roads (I couldn't have mapped the Pennine Cycleway without it), but with all the splitting and tidying, it's easier just to draw each road yourself for a complicated estate.
I wouldn't worry unduly about the track being on one side of a (single-carriageway) road or another: I guess if you were super-conscientious you could cycle it five times on each side to average out any GPS error, but I'm usually happy with just one try. Personally I figure I'm creating something at the precision level of (say) an A-Z or an Explorer map - the super-precise stuff I leave for the Germans who seem to love mapping every individual building.
Finally Nutty (incidentally, love the nickname) - yahooapis.com is just used for the satellite imagery backdrop, which we have permission from Yahoo to trace over, but whose coverage is restricted pretty much to the big cities - bizarrely London and Salisbury are in there but Birmingham isn't. You can stop Potlatch from looking for it by choosing a different background with the little preferences window ('tick' icon, bottom left).