The word record must indeed be inside the quotes. This is not a variable for REXX, but a parameter for EXECIO indicating that the output must be stored in the REXX variable with that name.
If we leave record outside the quotes, then REXX will first interpret the variable and optionally substitute its actual value. If the variable was never initialized then the result will be the same as putting it inside the quotes - the value is the name of the variable itself.
But, if we execute both statements as in the example, the first read will initialize the variable with the first record read. So, the second EXECIO will have problems, as the value of variable record will then be the contents of the first record.
In the very best case, the first record contains only one word, and is a valid REXX variable name. EXECIO will then be happy and put the new record into that variable, but you will have difficulties to know where your new record is stored, as you don't know the variable name that was in the first record.
Use the backward navigation to return to the lesson.