*URGENT* REFERENCE POINT confusion

//Code written by sbeener (suprabeener)
/*
  i wrote this code, but you can use and abuse it however you like.
  the methods are defined in the order which they occur to make it
  easier to understand.
*/
// variables ------------------------------------------
// put the path to your pics here, include the slashes (ie. "pics/")
// leave it blank if they're in the same directory
this.pathToPics = "";
// fill this array with your pics
this.pArray = ["1.jpg", "2.jpg", "3.jpg", "4.jpg", "5.jpg", "6.jpg", "7.jpg", "8.jpg", "9.jpg", "10.jpg", "11.jpg", "12.jpg", "13.jpg", "14.jpg", "15.jpg", "16.jpg", "17.jpg", "18.jpg", "19.jpg", "20.jpg"];
this.fadeSpeed = 20;
this.pIndex = 0;
// MovieClip methods ----------------------------------
// d=direction; should 1 or -1 but can be any number
//loads an image automatically when you run animation
loadMovie(this.pathToPics+this.pArray[0], _root.photo);
MovieClip.prototype.changePhoto = function(d) {
    // make sure pIndex falls within pArray.length
    this.pIndex = (this.pIndex+d)%this.pArray.length;
    if (this.pIndex<0) {
        this.pIndex += this.pArray.length;
    }
    this.onEnterFrame = fadeOut;
};
MovieClip.prototype.fadeOut = function() {
    if (this.photo._alpha>this.fadeSpeed) {
        this.photo._alpha -= this.fadeSpeed;
    } else {
        this.loadPhoto();
    }
};
MovieClip.prototype.loadPhoto = function() {
    // specify the movieclip to load images into
    var p = _root.photo;
    //------------------------------------------
    p._alpha = 0;
    p.loadMovie(this.pathToPics+this.pArray[this.pIndex]);
    this.onEnterFrame = loadMeter;
};
MovieClip.prototype.loadMeter = function() {
    var i, l, t;
    l = this.photo.getBytesLoaded();
    t = this.photo.getBytesTotal();
    if (t>0 && t == l) {
        this.onEnterFrame = fadeIn;
    } else {
        trace(l/t);
    }
};
MovieClip.prototype.fadeIn = function() {
    if (this.photo._alpha<100-this.fadeSpeed) {
        this.photo._alpha += this.fadeSpeed;
    } else {
        this.photo._alpha = 100;
        this.onEnterFrame = null;
    }
};
// Actions -----------------------------------------
// these aren't necessary, just an example implementation
this.onKeyDown = function() {
    if (Key.getCode() == Key.LEFT) {
        this.changePhoto(-1);
    } else if (Key.getCode() == Key.RIGHT) {
        this.changePhoto(1);
    }
};
Key.addListener(this);