yes, a bit confusing, that you do not gett straight to /root after booting liveCD. You have to cd .. and there they are /sources.
I used the Using LFS Live CD hint from the LFS website, it eased the job much. And I am a LFS newbie too so I like to startx to get XFCE running. So I can unpack new sources while previous are being compiled and read LFS book with Firefox at the same time