Pre-requisite: go to http://www.chiark.greenend.org.uk/~sgtatham/putty/download.html download http://the.earth.li/~sgtatham/putty/latest/x86/putty.exe and http://the.earth.li/~sgtatham/putty/latest/x86/puttygen.exe
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Click 'Generate' move the mouse around as instructed and wait
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enter your desired username
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enter your password
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save the private key
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copy the entire content of the 'Public key for pasting into OpenSSH authorized_keys file' window. Make sure, you copy every single character from the beginning to the very end!
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go to the cloud console http://cloud.google.com/console select your project and under Compute Engine / VM instances click on 'New instance' click on the advanced options link paste in the contents copied at step 5 into the entry box indicated
OMG, I spent HOURS trying to figure out Google's instructions... I did it in 5 minutes following yours. THANK YOU.