Is the j-th jump in the set is performed strictly after the (j-1)-th jump was performed?

Yes.

For sample case 2 when N=2 and x=1, why is the answer -1? 

If we arrange the Nth step as 1 2 3 then wouldn't 1st step take either value 1 or value 3?   
I am not sure if I understand the condition for b properly.

The integer in block b must be equal to the median of the three integers below b.