The instructions in the FAQ are a bit unclear. Clicking the menu item only works when it's displayed from the SCLogin module. If you try to use the link from a different type of module that shows the menu, this is when you will get the error you're seeing. The code to interpret sclogout is only within the SCLogin type modules.
Using this site sourcecoast.com as an example, we 1) created a My Account menu 2) added a sclogout menu item to that menu 3) set the Then SCLogin > Logout View Settings > "Show User Menu" to My Account. Our template shows the SCLogin module up near the menu bar.
-Melissa