Ok, so knowing you have a 5-Gallon brew pot, and you’ve already steeped 3.5 Lbs of grain, you can in fact do a partial-mash brew somewhat like an extract in that you are only doing a partial boil.
A full boil has several advantages but I'm not going to go into those here - you're not buying a new brew pot yet. I AM, however, going to take a stab at shedding some light on a method that will enable you to do your partial mash brews with the pot you have now. You're still going to boil a smaller amount and then top-up in the fermenter, it's just that you're going to be making some of your own extract here, and then adding some DME and water to get your 4 or so gallons for the boil.
If you started with a partial mash recipe for a 5.5-gallon batch of American Pale Ale, for instance, and plugged into BeerSmith2 an equipment profile containing a 5-gallon pot and configured it for Partial Mash, it might look something like this: 3 Lbs US 2-row malt, 8 oz 20L crystal malt, 6 Lbs Extra-Light DME, 1 oz Columbus pellets (17%AA) at 60 Minutes, 1 oz Centennial (11.6%AA) at 10 minutes, and 1 oz Cascade (6.8%AA) at 5 minutes. This should give you around a 1.060 – 1.065 OG with around 45 – 50 IBUs and a BU/GU between 750 and 800. With a good ounce or so of Cascade for 4 or 5 days at the end of fermentation, this should give you a tasty pale ale.
Disclaimer: This is NOT an exact recipe – your mileage may vary – only a very rough estimate for example’s sake.
Ok, now assuming we’re going to build this beer in your 5-gallon pot – BS2 tells me we’d need 4.2 gallons come boil time meaning once the grains are mashed and sparging is complete and the 6 Lbs of DME are in the pot (this part can go several ways – some may say to hold some of the DME back to avoid darkening too much – we’re starting very light already (about 5 SRM), and an APA can go to 14 SRM – besides, this gets into hop utilization issues, and I’ll choose to avoid that topic for now).
You’d follow the mash schedule and add 1.3 – 1.5 quarts of water per pound of grain (about 5 quarts in this case) to your pot, heat to about 160 – 165 F, drop the bag of crushed grains in and stir well to wet, cover and hold at 150-154 F for an hour or so, pull the bag and drain over the pot, rinse with 170 F water a few times and discard the grain bag. I used to place the bag in a large strainer that I could rest on top of the pot – made rinsing easy.
Now you’ve got somewhere between 3 and 4 quarts of sweet wort in the pot. Add the DME and some more water and mix until all the DME is dissolved - be sure you've added enough water to get your 4.2 gallons in the pot and bring it to a boil (carefully!) Once it comes to a boil, add your 60-minute hops and start your timer, and have a homebrew! Finish hopping, chill, transfer to the fermenter, top-up to 5.5 gallons, check and record the OG, pitch the yeast and let it rock!
Very rough example, sure; but I hope I've illustrated how you can use your current set-up to do a real partial mash if you want to. Remember to keep an eye on hop utilization when doing partial vs. full boils - volume and water-to-sugar ratios change everything!