First of all, Lancelot development is now branched to KDE 4.1 compatible development and trunk. It needed to be done since there already are API changes in libplasma, and I want L to be in shape for 4.1 too. The 4.1 compatible code is located in /branches/work/lancelot/kde4.1-backport/. It is a bit misleading name - ‘backport’ - since the main development happens there, and then, changes are copied to the trunk. I’m updating the trunk on every major change so it still is the latest development release.
In the other news, the Favourites section works perfectly. When you start Lancelot for the first time, favourite applications will be loaded from Kickoff, or if there is no kickofrc file will be populated with default set of applications. If you want to add or remove an application from the Favourites, just right-click it. Although this looks like a trivial change, there had to be a couple of big improvements under the surface - Lancelot had no support for context menus before this :)