In today's mail, I received a book that was just canceled yesterday as the sender wasn't responding to the auto PMs.  According to the help docs, I could have taken three steps. 1)mark received-will get credit 2)mark RWAP-will get credit  3)mark not received-will not get credit.  I chose to mark the book received; my thinking is that I did get the book and it was in postable condition.  Should I have marked it RWAP and explained it was received after  being canceled?

Not sure what part of the Help Center you read those options, but you did mark the book correctly.

You would not mark a book received as RWAP if there was no problem with the book, arriving after the system cancelled the transaction is NOT an official problem and it would be incorrect to mark the book as RWAP unless the book was not postable or damaged in some way.

There is also no way to mark a book as not received, either you mark it received or you don't. If you had not received another copy of the book because of the sender's failure to mark a book mailed, then you are required to mark the book received, The only get out marking the book received card there is, is when the requester receives two copies after submitting one request. 

What was the reason the request was cancelled? Did the sender not accept the request? Not mark it mailed in time? Or did it reach the 26 day and go lost in the system? In the first two instances, the request would automatically be transferred to the next person with the book, or placed back on your Wish List so you will want to check your main account page and cancel any new requests for the book or check your Wish List and remove the wish for the book.

I was sent an auto email from PBS stating the the sender hadn't replied to any of the emails, so PBS was canceling the transaction.  The book then reappeared on my wish list as the email to me from PBS stated that it would.  When I did get the book today in the mail, I went to my transaction archive and a button was there "was the book recieved".  I clicked on that button and a window with 3 buttons appeared along with some text.  I chose the YES button and was curious on what others thought of my choice.

This is part of the email I received from PBS:

We have sent multiple emails to the member from whom you requested it, and have not received a response. Because the sender has not responded, we have canceled the request and returned the book credit to your account.
As you know, the success of the club is dependent upon all of us being committed to sharing books in a timely manner. As a courtesy to you, we have placed this book on your Wish List. Should it become available in the future, you will be notified. If the book was previously on your Wish List when it was offered to you, you have gone back to your previous position in the Wish List queue for the book.

Jennifer,

It happens often that some members mail a book but forget to mark it mailed. If they don't mark the book mailed, the system assumes the person didn't mailed it, cancels the transaction and if there are no more copies available of the book, returns your credit and puts you back in the WL.

That's why if a member prints the wrapper but doesn't mark the book mailed, I usually contact them to verify whether they mailed or not.

There is a help document called "I received a book from a cancelled transaction". Here is a link to it: 

 http://www.paperbackswap.com/help/help_item.php?id=138

I am not sure what you read, but yes, you did the corect thing in your situation. If you have only received one copy of the book and it is in postable condition, you are required to mark it received normally. You should not mark a postable book RWAP for any reason. Only unpostable books can be marked RWAP, and you woudl either select from "Damaged by Sender" or 'Damaged by Post Office" as the reason. You cannot mark a book "not received". When books are not received, they are automatically marked as "lost" by PBS after a period of days. There is no way for you to do that. (Yes, there is a button labeled that, but if you click on it, it just tells you to keep waiting for the book. It does not actually "do" anything).

Follow the other instructions in the help document regarding checking to make sure you remove the book from your Wish List, and to cancel any other transactions that you may have open for this book.

Emails from PBS are automated. Everybody receives the same email in certain situations. Sometimes, depending on the subject of the email,  the email has a "custom paragraph" automatically inserted, which would contain the text of someone's message to you regarding the transaction (like a reason a book cannot be mailed, or if someone declines a Requestor Condition). But the bulk of the text is just an automatic email.

Make sure you take the book of your WL.  Also are you sure it was from the 1st person and that the book didn't get posted and sent by someone else after the 1st one timed out?