Okay, let's step back a little bit. You want to set up an environment that works pretty much like a shared host, and you need it quick, right?
Then let's stop trying to troubleshoot configuration files by hand and let's install a decent control panel.
Shut down your linode, shrink the disk image with which you've been working, and create a new Ubuntu 9.04 image. Yes, we're starting fresh.
http://ispconfig.org/documentation.htm
Choose Ubuntu 9.04.
Skip the first two pages, because Ubuntu is already installed for you. Start with page 3, number 7.
Just copy & paste from the tutorial, step by step, changing a few numbers as necessary (such as IP addresses)
Whenever it says
vi something, replace the vi with nano. Vi is a text editor which isn't particularly n00b-friendly.
See if you have better luck with a more detailed tutorial like this.