Well I just got this to work by investigating the command line arguments being passed to lame from kaudiocreator. It seems that the "--r3mix" option is NOT supported by lame thefore causes lame to error. Also I had to delete the "--tg" argument because "empty" was causing errors as well.
Try deleteing those arguments and see what you get.
Also make sure you have lame installed.
Open a terminal and type "lame" if you get command not recgonized get it for suse from here - http://packman.iu-bremen.de/suse/9.1...-pm.1.i586.rpm