No, he means don't put your custom system inside <factionstart>. That isn't a tag, it's a group, and you can't append inside of it. It would be like trying to append additional stats to a ship components.
90% sure this is the kind of issue you're having.
<InternalName>FactionStart</InternalName> <--- Is not appendable because its a sub table within a Table.
You have to make your own sub table to append the StarSystemDefs.xml, or use the replace method.