#1) I'm not sure why you "chown -R root /bin"; Root can read/write anything it wants at anytime, and I don't remember that being a part of the LFS book. It doesn't affect your problem, but it's an unnecessary step.
#2) The error is saying you alrady have a /bin/pwd (I know: "No $@&! Sherlock!"), so you need to do some research. Find out if the /bin/pwd is a legitimate executable. If it is, then you can skip that part of the command (and you'll want to take off the rm at the end too). That's doubtful because you should have chroot'ed into your LFS system at this point, and /bin/pwd should not exist at that point.
If /bin/pwd is a symlink, that suggests you tried the command earlier and it failed before it got to "rm /bin/pwd". So, you can either "rm /bin/pwd" and issue the command again, change "ln -s" to "ln -sf", or skip that portion of the command entirely.
P.S. I would also be helpful to mention you're using a previous version of the LFS book and, like XavierP mentioned, to clarify what the problem is, even if it might seem obvious. I couldn't tell at first until I squinted to see the "ln: `/bin/pwd': File exists" in that long glob of a command (a couple newlines wouldn't hurt either...
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