The real trick for the compile-it-yourself kernel is in:
3) make menuconfig (or xconfig) - configure what you want
By this, I mean some options require other options, and it isn't entirely obvious to a newcomer just what options a common system needs to function well, and what options you know you don't need. By all means, experiment and learn, but do make sure you keep a fully bootable kernel hanging around when you hit problems.
Also, be sure that you read tutorials that cover making and installing the modules that go along with your kernel. For an older reference, there's also the "Kernel-HOWTO" guide which can be google'd for.