I'm adding some short notes here to make it easier in the future.
- Make your model. Make sure to place vertices near the joints. Save file.
- Open up avatar.blend in Blender. Copy the bones layer into your model file.
- Align the model (and the bones if you're changing their lengths) so it and the bones looks reasonable. Parent (control-P) the bones and the model, and use the "envelopes" option.
- Select a bit of bone, and go into Pose mode (object, edit, etc)
- Select the mesh and go into Weight mode. Blue is no effect, Red is full effect. (object data - the little triangle tab - shows which bone you're on) Paint to your heart's content. Save.
- If you modded the bones: Select the bones. Object | Apply | Rotation and Scale
- Select the mesh and bones.
- Export to collada as rigged SL object. If you changed the bones from default, or sized the bones up or down, make sure Deform Bones is checked.
- Upload in SL as a rigged mesh. Check the boxes for skin weights and joint positions, and adjust the height offset as needed.