6. moving along to #make bzimage.
This gives an error and ever does anything. but I continue anyway.
7. make modules
This also gave an error and never did anything
You've got a contradiction in your post. You say that you've got errors from make bzImage and make modules, but you can still boot. Since make bzImage is the command that actually compiles the kernel, if that doesn't work, you don't have a new kernel. Same with make modules. If it doesn't work, you don't have modules. Post the errors you're seeing any hopefully something will pop out. The other thing to do is run uname -a
and make sure the running kernel is the same version as you compiled. The one thing that is missing from your protocol is copying the new kernel and modules to the appropriate places. If you modified your Makefile, then it may have copied stuff automatically. If you didn't, then you may not be installing a new kernel.
When you save from make xconfig, you should see a message saying that the config file is saved and you can proceed to the next step. One way to test if your config file is saved is to open make xconfig again and the changes you saved should still be there.