Yeah, I spent a few hours on it building from scratch, after building guile, libltdl.so.3 (missing from current libtool extension)., etc, but it still had problems. I also tried the install script. Maybe an older version would work, I don't know. This reminds me of the skype ordeal. Maybe they'll come up with a version that's more compatible, but for now it works great with tc_1X. (or < 2.3)
Edit: Okay....you guessed it....run with "sudo" I'm running tinycore_2.4rc2
tc@box:~$ sudo lilypond /mnt/hda3/lilypond/Steps
GNU LilyPond 2.12.2
Processing `/mnt/hda3/lilypond/Steps'
Parsing...
Interpreting music... [8][16][24]
Preprocessing graphical objects...
Finding the ideal number of pages...
Fitting music on 1 page...
Drawing systems...
Layout output to `Steps.ps'...
Converting to `./Steps.pdf'...