So for example, If i Wanted to go to Marriott Ocean Watch Villas July 4-11 2014 I would need tp purchase roughly 5400 points, according to their chart.  So I rent the points from someone, where do they put those points for me?  or do they simply make the res with their points i rented and get me a guest certificate?

This is what will happen -- they make the reservation for you and put it in your name.  I just did this with another individual, and booked a 4 night reservation for them with my penalty box points.  I put their name on the reservation and they are good to go.Best,Greg