My Lisp-fu is lower than the expected for this exercice. But it seems that you have to create a recursive function not a recursive macro, which is what you are doing.
Maybe the macro has to define a new recursive function that recurses until need, and then call it?
I'm not sure, but I think you need to use labels, rather than flet, in this case, since local functions defined using flet cannot be recursive. At least that's how I interpret what it says on page 319.
Maybe the macro has to define a new recursive function that recurses until need, and then call it?