By the way, although the basemap issues are unrelated to whether you're using ArcGIS Desktop 10 or 10.1, you may encounter some other changes to functionality or the user interface that affect the book instructions. We haven't fully catalogued these yet, but I think you should still be able to do everything in the book. I think there are differences in the way coordinate systems are exposed in the user interface (which may affect Exercise 3B) and probably some other stuff, too. If you get stuck, let us know.
Tim