Absolute value bars are written |x|; the | character is shift-\ on a US keyboard.
You seem to be misunderstanding what Paul does, since x^2 + x - 11 \neq (x + 5)(x - 4). In fact, what he appears to be doing is subtracting 9 from both sides and factoring x^2 + x - 20 = (x + 5)(x - 4), then claiming that \lim_{x\to 4} x^2 + x - 20 = 0.
From there, the limit argument goes: Fix some \varepsilon > 0, and try to find \delta so that whenever 0 < |x - 4| < \delta we have |x^2 + x - 20| < \varepsilon.
The argument with K uses the fact that we only care about what happens "close to 4", because we can always make \delta smaller without breaking anything in the proof. In a limit proof, you often want to focus attention only on the parts of your expression that vanish, by estimating the other parts. In this case, Paul says "suppose we could estimate x + 5 by a constant, that is, find some K > 0 so that -- at least for x close enough to 4 -- we have |x + 5| < K. Then in order to prove |x^2 + x - 20| < \varepsilon, it would be enough to prove K|x - 4| < \varepsilon."
You seem to be getting confused by the order of reasoning. \varepsilon is always given at the beginning, and the whole chain of reasoning is based around getting your error to fit under \varepsilon -- because what "limit" means is "no matter how small \varepsilon is, you can manage to fit under it by making \delta small enough". Then the inequality K|x - 4| < \varepsilon is not an assumption, but a reduction. Paul is saying "because of our estimate |x + 5| < K for x close enough to 4, in order to prove what we want, it is good enough to prove K|x - 4| < \varepsilon".
To make things more concrete, let's say that when |x - 4| < 1 we find |x + 5| < 10, so that K = 10. Then we need to find \delta small enough that when 0 < |x - 4| < \delta then 10|x - 4| < \varepsilon (and in any case \delta \leq 1 because we made that assumption already to set the value of K). Well, that's simple enough: to get 10|x - 4| < \varepsilon all we need is |x - 4| < \varepsilon/10; so finally we end up with a proof that, if \delta = \min\{1, \varepsilon/10\}, then 0 < |x - 4| < \delta implies |x^2 + x - 20| < \varepsilon.