I also think it might be better to put the "already exists" first, because all users can follow those instructions if it's true and it's often better to put easier things first. I also reversed the order of the "if you have a paid account and the feed doesn't exist" bit, because in this instance the state that decides which action to perform is whether or not the feed is already syndicated, not whether or not you have a Paid Account.
- Feed Already on LiveJournal: If the feed URL already exists as a syndicated account, you will see an Add Friend page with the feed's username.
- Create a Syndicated Account on LiveJournal: If the feed doesn't already exist as a syndicated account, and you are a Paid or Permanent user, you will be prompted for a username. Once you have entered your desired username, the syndicated account will be created and you will see an Add Friend page with the feed's username.