Thanks for the help, unfortunately it did not make a difference. Here is what I did:
(as root) rm config/* lh cleanlh config --archive-areas 'main non-free' -d lenny -b iso --apt-recommends false
lh buildAnd still got the same error. For some reason lh is still trying to install the 2.6.26 kernel. I even tried backing up my stuff and "rm -r config" but still had the same results.
I also tried the method suggested by intrigeri. I cloned the git repo, then copied the config/chroot_local-packages/aufs-modules-2.6-686_1.0_all.deb and squashfs-modules-2.6-686_1.0_all.deb packages to my config/chroot_local-packages and then set up the debian backports repo. It looks like this method will work, however I still have a small problem. Live helper installs two kernel versions; one for i486 and another for i686. The fake packages provided by T(A)ILS only covers i686 so I still run into dependency problems. I'm not sure how to configure lh for i686 only (-a i686 did not work) so I may have to make i486 versions of the squashfs and aufs packages. Once again, thanks for the help.
............... Setting up squashfs-modules-2.6.26-2-486 (2.6.26+3.3-6+lenny3) ... dpkg: dependency problems prevent configuration of squashfs-modules-2.6-486:squashfs-modules-2.6-486 depends on linux-latest-modules-2.6.26-2-486; however:
Package linux-latest-modules-2.6.26-2-486 is not installed. dpkg: error processing squashfs-modules-2.6-486 (--configure): dependency problems - leaving unconfigured Setting up squashfs-modules-2.6-686 (1.0) ... Setting up synaptic (0.62.1+nmu1) ...
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