1) After you have untarred the linux source, cd to its directory and run
either "make menuconfig" or "make oldconfig". This will import the
kernel configuration of the currently running kernel. (You could also
copy the config file manually from /boot/config-your.kernel.version
to .config in the linux source directory.)
2) "make-kpkg clean" to start from a clean slate.
3) "make-kpkg --initrd --append-to-version=-custom1 --revision=00
kernel_image" will compile the kernel and build a .deb package in
/usr/src. You can of course choose your own name for "-custom1"and if
you compile more than once (with different configurations) you can
increment the --revision number.
4) Finally you can install the .deb of the freshly-compiled kernel with
"dpkg -i linux-image-2.6.16-custom1_00_xxxx.deb". ("xxxx" is the
identifier for your architecture.) This will automatically build the
initrd for you and will update grub (or lilo) so that you can select
the new kernel when you reboot. Your other installed kernels remain
available in the boot menu so that you can fall back on one of them
if there should be a problem with the new kernel.