The SQO instruction will move the contents of the source file into the destination using the mask which you have set for all sixteen bits to be passed through. (Mask: FFFFh = 1111 1111 1111 1111)
Each time the SQO instruction goes true, it will increment its position value and move N7: [0 + R6:0.POS] to the destination O:0.0.
So, when the position is 1, the 16 bits in N7:1 will be moved to the output word (O:0.0 through O:0.15).
Then, 5 seconds later, the timer will be done, and increment the R6:0.POS to 2 and move N7:2 to the output word.
And so on and so forth...
I am not able to make out what you intend to do with the next rungs...