It is very difficult to build a LiveCD from scratch. Basically,
you need a kernel that can read ISO9660 images, a file system image
(either squashfs or cloop), and an overlay system, to make it look
like you are changing things on the file system, but are erased on
shutdown. The overlay is one of the most difficult things to
construct from scratch, which is why I recommend you use a base CD
from an existing LiveCD distro.
There are several distros you can use as a base, and several
tools you can use to help you. Ubuntu, Debian, Knoppix, and Slax
are the most popular bases for LiveCDs. To remaster the image, you
can:
* Use Remastersys (for Ubuntu). * Use DRUDell (for Ubuntu) * Use
Revisor (Fedora) * Use mklivecd (Debian and Madriva) * Use Custom
NimbleX (online LiveCD creator, based on Slackware) * Do it
manually, via the command line.
The instructions vary per distro on the command line. Basically,
you copy all the contents off an ISO image, mount the compressed
file system, copy it's contents to another folder, chroot into
those contents, make changes, build a new compressed image, and
build the contents back into an ISO image. While this method is
more difficult (or at least more tedious), it allows you far more
power to customize.