The particle will act as a fluid being confined by a free boundary. The first processing step is marking all of the cells with particles in them as fluid cells, and then marking the rest of the cells depending on their neightbor (1 empty cell, 2 empty cells etc etc.) , also specifying the direction. I have that code as well if that wll clarify things. So given an initial velocity, I will make a series of calculations that give me new velocites and pressure at Tn+1. Then I can reassign the boundary conditions for the free boundary, and then re mark the Fluid cells (particle cells) and so on. I hope that answers your question .

I am also having trouble making sense of this structure and converting it.

 /* Mark cells containing particles as fluid cells (loop over particle
+s) */
 /*-------------------------------------------------------------------
+---*/
 for (n=1;n<=N;n++)
    for(part=Particlelines[n].Particles; part->next != NULL; part=part
+->next)
      {
       x = part->next->x;
       y = part->next->y;

       i = (int)(x/delx)+1;
       j = (int)(y/dely)+1;

       if (FLAG[i][j] < C_F) 
         {     /* delete particles in obstacle cells */
          help = part->next->next;
          free(part->next);
          part->next = help;
          Particlelines[n].length--;
     }
       else
          FLAG[i][j] = FLAG[i][j] & ~C_E;
      }
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