I came across this video showing how to setup custom home page using Panels. I installed the Chaos tool suite, and Panels modules, but I don't see the Layout designer interface anywhere as it is shown in the video.
Have a look at Administer xe2x80xba Site building xe2x80xba Pages for the page you are wanting to design.
Click on the Content link in the left column and you should see a button for 'Show Layout Designer'.
I found it - well sort of. In my Main panel menu, once you have created a page and chosen custom layout,under the list of pages, there is a manga custom layout option. This takes you to a page that looks like the layout designer they were talking about.