I believe I understand the algorithm quite clearly, except for the step where you look to see if there's any points that are close by looking across the division and create a strip where points within the strip are candidates.
But then the algorithm states to sort the points by their y coordinates and then check each other point in the strip to find if there is a smaller distance than the one previously found. It basically sounds like you brute force within the strip.
For example, here's what Introduction to Algorithms states:
So it seems you just take each point and compare it against all the others to find the closest points? Why is it necessary to sort by y value then? You already have them sorted by x, why not brute force with that?