Install a daemon is just the way to install any application (a daemon IS an application). The hot point is to launch the daemon at each windows manager session. Here is where the Taz Control box is useful. Go to Slitaz menu > System tools > Control box, then display "Initialization" (second tab) and look for the "Run daemons" form field: add here, at the end of the line, your daemon shell command (separator is space). Click change, reboot session (disconnect-reconnect) and it should be done
I can hardly tell if this log show warnings (no lethal errors) or die errors (lethal errors). Then, maybe installation has correctly proceeded though. If Busybox show some limitations, you can always install "coreutils-xxx" packages (there is one super-global-meta-package and several smaller meta-packages) with Tazpkg, the commands will overcrowd those embedded by Busybox. You can also install "bash" the same way.
2. Sometimes you have to adapt those init scripts to SliTaz. Or you can use /etc/init.d/local.sh to start you daemon. Read the README file in /etc/init.d
3. Yes busybox applets have limitation. Installing PERL modules from CPAN doesn't present any difficulties or imcompatibilities.
I will try to install octopussy in my side and try to help you. And why not cooking...