My foolproof recommendation for any errors when dealing with LFS is 'start again' - I redid my install 6 times (don't ask) before I finally got things right, so I speak from experience.. "Follow book, book good"
As for your second query, unless the book specifically says "DONT DELETE THIS, IT'S NEEDED LATER" (usually in big red bold letters), you should -always- clean up after yourself. Yes, you need to re-extract the tar for a clean directory before rebuilding
The various passes apply different patches for different things, and link against different places. "Trust the book".. it states early on that each directory should be removed after building from it, unless specifically told not to
And don't stress. I did it too..
Good luck with your LFS experience, it's a ride that's worth taking!