The inner hash covers the inner key pad and message.
highlighted = computed this step
The message goes inside first
The inner input joins 0x3938 with message 0x6869.
inner input=0x39386869
The inner input is exact bytes
The joined inner input is 0x39386869.
inner input=0x39386869
The toy hash sums the bytes
The byte sum is 0x142, so the low byte is 0x42.
H(0x39386869)=0x42
Summary
The inner hash is 0x42.
inner=0x42