You need 7 different coloured plants => have you got them? If so, the char with the alchemy skill should be leading or in single mode and have them in his/her inventory. Then right click on a bunch - select size - a new pane pops up => select potion.
At lvl 4 you should be able to extract large and even permanent potions - if you have the holy water (in 1.42 it can be used only once for this). But lvl 3 is sufficient for creating large potions.
As you can see in the following list, there are 7 different plants you need to make all potions with the "extract" skill. Empty flasks are not required.
Level 1 => small potions
Level 2 => medium potions
Level 3 => large
level 4 => large (stronger) + permanent potions + holy water (quest reward)
level 5 => large (even more stronger) + perm potions in vitality, mana, stamina are stronger, too.
vitality => red, blue
mana = green, pink
stamina => white, orange
strength => red, blue, yellow
int => white, green, pink
agility => white, orange, green
survival => red, blue, green
con => orange, yellow, pink
speed => orange, white, yellow
restoration => can only be done with the "combine skill" => dragging red over blue potions.
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