I recently was successful in building the Pandora firmware from scratch. I wrote the steps I took while doing this. aTc in IRC was extremely patient and helpful getting through the errors. I am writing this in hopes that it helps someone else or can be formatted better and posted where it will help a wider audience.

Thank you,
Wayne aka Fueler
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I used a Virtual Box and created a VM
Debian 32-bit latest net install
HD 250GB, only 130GB used at the end so this gives room to grow

After OS install brought up a terminal and started:
cd to home directory

apt-get install git python help2man diffstat texi2html subversion cvs gawk texinfo rarian-compat gnome-doc-utils desktop-file-utils x11-xserver-utils
apt-get install build-essential

I also got python-psyco to help python run faster

git clone git://git.openpandora.org/pandora-oe-environment.git pandora-firmware
cd pandora-firmware
source ./op-env-oe.sh   <------ MUST do this everytime you come back to this
./initial-setup.sh

Note: anything missing I used what was located at http://openpandora.org/firmware/sources/ unless specified otherwise

Reconfigure shell as /bin/sh as bash, dash cannot be used
dpkg-reconfigure dash

Doing it in steps:
bitbake -k pandora-xfce-image
When that fails...
chmod +x /home/panos/pandora-firmware/sources/Graphics_SDK_setuplinux_4_0*.bin
bitbake glibc-initial
bitbake libgles-omap3
This causes SDK GUI to pop up, install it

Then back to "bitbake -k pandora-xfce-image" again

Ran into xfwm4 build error

Added the following in pandora_firmware/metadata/openembedded.git/conf/checksums.ini

Easy enough to create with gtkhash
[http://mocha.xfce.org/archive/src/xfce/xfwm4/4.6/xfwm4-4.6.2.tar.bz2]
md5=3e6c0c54b028b6ea60e865e55ecdf3f8
sha256=212819ee03c24635f79d50930284c422469e22489952d0b286e6fe5af2155828

Note: For some reason this commit was not picked up... (found it after created it myself, /facepalm)
http://code.damagedgoodz.net/p/pandora-oe/source/commit/73c699dccf31e99a97c25ea302537330a8a1f43f/

bitbake xfwm4-4.6.2

Now back to "bitbake -k pandora-xfce-image" again

Ran in to squashfs tools build error

http://wreck.k-n-p.org/squashfs-tools.tar.bz2 , make a "recipes" dir in metadata/user.collection, and extract that in there

made sure sources/cvs/squashfs-tools is deleted

bitbake squashfs-tools-4.0

Now back to "bitbake -k pandora-xfce-image" again

error, reporting encodings error

bitbake -c clean encodings

Now back to "bitbake -k pandora-xfce-image" again

Now there is a image in
pandora-firmware/tmp/angstrom.5/deploy/glibc/images/omap3-pandora
as pandora-xfce-image-omap3-pandora.tar.bz2

http://pandorawiki.org/Running_Linux_from_an_SD_card