How to edit the smart object in this Photoshop template?

I'm completely new to Photoshop and I've been trying to replace the image in a template with my screenshot.

I went through other questions here and elsewhere online and learnt the basics of using a smart object.

I've tried to do the same with other PSD templates I obtained online to see if I'm doing it right and I was clearly successful. But I tried the same with this particular file and I am unable to get the right output.

Can someone please provide a step by step instruction of how to handle this particular file?

PSD template: http://bit.ly/1gPdIl5 (Moto 360 Product Template.psd)

My Image: