Which Debian-based distro are you using?
Which are the specific steps?
If i want to build a live-cd i usually create a partition or a VBox-mashine, install Debian, configure it the way i want it, create a Live-directory (mkdir /home/user/Live), cd to it and run:
lh config --bootstrap copy --debian-installer live
lh build
And that's all what needs to be done. Live-builder is a bit touchy bout kernels (its a bit touchy in general, might work like a charme, might give you a heck lot of trouble).
What exactly do you want? A copy of your system or just a live-CD with some further apps?
Cause you may build Debian-Live-CDs from online now:
http://live-helper.debian.net/cgi-bin/live-helper
(the page seems down at the moment).
The problems you got might be related to Qemu. Burn the iso and run it from the PC or try the iso in VirtualBox. I seem to remember about problems i had with Qemu.