Hi Mark,
> I have not yet federated ArcGIS Server with Portal. Do I need to federate first?
Yes. First you would configure your ArcGIS Server site with the ArcGIS Data Store. Then, federate the Server site with Portal for ArcGIS. After you've federated, the Server site will be available to become a hosting server for Portal.
After you've deployed the ArcGIS Enterprise base deployment, then you should be able to publish/create hosted layers in Portal.
> What should it look like in Portal after federation is completed?
Each web service that already exists in the Server site (before federation) will become a web layer in Portal (after you've federated). These will appear on the Content page of the admin account that performed the federation.
Hope this helps,