Reverend Uncle Bastard
Am I right in assuming that during this solo challenge you hurt yourself when you scrap cards?
By scrapping cards you add it to the pile which will increase the damage the beast does to you on his turn.
Is this correct, or, did I misunderstand the rules?
You misunderstood the rules. Only one card a turn (the one removed from the far left of the trade row) is added to the Nemesis Beasts pile of cards. If you scrap a card, it just goes into the regular scrap pile, not the Nemesis Beast's pile.