I too had the exact same experience, it all seems to be working except for the lua compile issue.
ok, read all the docs on nick's site, got smaug fuss 1.7 lua to compile. in the docs it says compile lua make linux, but it needs make ansi. ok, now you want to hear something funny? SmaugFuss 1.7 Lua won't run fuss areas or smaug areas. I get this error in my logs, and the mud exits.
Thu Dec 6 01:25:05 2007 ::
Reading in area files...(help.are)
Thu Dec 6 01:25:05 2007 ::
[*****] FILE: limbo.are LINE: 1
Thu Dec 6 01:25:05 2007 ::
[*****] BUG: load_area_file: bad section name: FUSSAREA
ain't this fun? I tryed both fuss areas and smaug areas.
this could drive me to drink soon...
The area problem is really easy to fix, pull out the areas from the origional package you downloaded and load up with those.
Nicks smaug lua code is an earlier version of FUSS and does not use the FUSSAREA section name convention of the newer versions of fuss.
Areas while you may think are totally portable between versions of smaug are sometimes not. The newest versions of FUSS have some fixes to the area file format that make nested containers work correctly.
So untar all the files again out of the package you linked above, re-compile, fix the error in code and it should just start up for you.