steps 2 and 3 are is a must when you have damaged garuga already
it also increases your chance of sucess. I failed when I didn't bring insect husk with me.
Well, not sure what you are doing wrong, but I have killed the garuga 27 times and waited in area 7 probably 27 times also and not once did I take or trade anything with the little dude. If he is just 'damaged' as you say, you shouldnt be going to area 7 anyway, not until after you kill garuga. But, hey, this is your post, have it your way.