Thanks everyone and sorry for all the confusion.
Yes, we have a timeshare with RCI and we traded/rented/booked via DVC that way. So it is all above board. It is our first time doing so, so that is why I am in the thought process that it works like a regular Disney Vacation package. I am glad I can just add things as I want and not have to book a true package.
For the person who asked about the waitlist. We joined it in August of 2012 for March 2013 rental. We got 2 properties that we didn't really want, so we let them go. We then got BLT. When they called, the RCI agent said that it was a different Bay Lake and not near Disney, so we let it go (despite my being very suspicious). Then we got notification that we had let too many go and we were taken off the wait list. We called back and told them what happened and that we would have taken BLT if they told us it was on Disney. So long story short, we got put back on and then we have been calling daily to double check. We called yesterday and they had a room for us.
So my lesson is, don't pass up one that you would be ok staying in and if it starts getting close, just call and ask daily.
Good luck!!