Spent the last few hours on this (using 12.04) managed to get the same problem. Have you installed patch
on the host system it,s in the repos,
did you get /mnt/lfs
reply? If not run
Chapter 4.4 did you create the 2 files for user lfs?
then run command
right at the bottom?
I would start again.
Make sure you apply the patch in binutils
I think I covered it all.
I think the problem is with either the .bash_profile or LFS path