You've almost got it. In the CD0 file, change scsi.device (refers to SCSI interface on Commodore SCSI peripherals) to whatever your GVP board uses - probably gvpscsi.device.
ENVARC: is a system assign created automatically by the startup-sequence. It refers to the directory SYS:Prefs/Env-Archive. All your prefs settings are stored there. The contents are copied to RAM:Env on bootup for fast access. If you plan on playing audio CDs with your Amiga, the instructions are telling you to copy an icon to ENVARC: that will be displayed on the Workbench whenever you insert an audio disc. The default tool will call up a CD player program when you open the disc.