Hi there - the tab is correct - I am lightly picking the open D string at that spot. Then on the upstroke I'm picking the b string.
The key to strumming and picking this song is the steady and relaxed downstroke/upstroke motion. This is a bit of a difficult tune because you're combining chords with single note melodies, so be sure to go very slow at first. Once you start getting it correctly at a slow speed -- keep repeating it to burn it into your fingers and muscles.
Make sense? Let me know how it goes!
Mike
Keep rockin!
Mike Olekshy
GT Guitar Coach