This is where all the action is. Day one at SXSW Interactive was simply a teaser to the events that happened today. The panels were more mentally engaging, the speakers seemed more alert and prepared, but most of all, the ScreenBurn Arcade 2008 ignited.

What is a bad website?

Sometimes it's just abut bad timing, like Kozmo.com burning through $283 million to try home-delivery too early. Or it's wasted resources, like pets.com, who frittered away $130 million on Superbowl ads)

Nah, the Worst Website Ever panel was looking for really bad ideas, like 3D-mail, where a bouncer throws your spam off Miami Beach. Which is real. Seriously. Less real, but brilliantly conceived, was PuppiesAndBabiesForRent.com (freelance developer Jeffery Bennett explained that it failed because "the majority of people who want to rent children aren't legally allowed near them. Plus, puppies think babies are delicious.") Then there was image search for the blind, downloadable scents, and hosting a mirror of the entire Internet on your servers. There was one point of consensus. If anyone uses the word "monetized', run for the hills.

When it comes to international development, the road to IT hell is paved with good intentions. Steve Howard of AMD mentioned a village he visited in Uganda that had been given an uplink dish for an internet connection: the kind donors had never told the locals they had to reposition it if it ever got knocked out of alignment. So when he visited, it was pointing uselessly at the ground.

He thinks the problem is that developers don't think about everything that surrounds their machine in the field. He calls this the ecosystem approach. This means ensuring energy reliability, proper finance, and proper support and training. He noted the One Laptop Per Child project, where it's not just a machine, but an integrated project: and, he added, it cannot and should not be the sole solution to getting helpful tech into developing nations.

And don't forget means what limited equipment is in the field when you start writing code. "We're talking about Web2.0 " he said. "Emphasis needs to be put on Web.02."

No website administrator wants the police (or FBI, or Homeland Security) to come tapping on their door because of what someone has said on their site.

Panelist Mohammed Suleiman Khan of blog aggregator Hadithuna.com had some pretty sensible advice to when to say 'enough is enough' without compromising free speech. He had some pretty simple advice: keep clear until it's really a problem. When does it become a problem? He uses that great jargon term that has become a fave amongst campaign managers and marketing people: the tipping point, which he says he can gauge against four easy criteria:

Is it unprotected speech?
Is it a non-constructive opinion?
Do they run contrary to the point of the website?
Are they driving users away?

It seems like anytime someone talks about Muslims on the Web, everyone is bundled together as one radical mass. According to the panelists this afternoon at Online Extremism – and the Muslims Who Fight It, people need to get smarter not just about who is radical and not, but what kind of radical.

So what should people really look for? "Violent radicalization, and that violent part is important," said Shaarik Zafar, senior policy adviser with the Department of Homeland Security Office for Civil Rights and Civil Liberties. Since so many people (including policy makers) have so little grasp of Islamic scholarship and its myriad, complicated theological strands, they miss the big difference between the ascetics of Sufism and a bomb-building terrorist, like there is between a Quaker and a white supremacist.

"You can't kill and capture a website," said Frank Cilluffo, director of Homeland Security Policy Institute. He called Al-Qaeda a brand more than an organization, and a brand name can be damaged like any other brand, by tackling and discrediting them. That meant not attacking Muslim religiosity on the web, but encouraging (without co-opting) Islamic scholars to highlight the intellectual bankruptcy and un-Islamic nature of some radicals: to find "a Tookie Williams of terrorism." They exist, he said: several former spiritual advisers to Osama bin-Laden have now renounced him.

(Part one of this interview is now online)

Something is making gaming innovator and SXSW:IA panelist Tim Langdell scratch his head. "The biggest selling-game ever was The Sims 1. The biggest selling game for women was The Sims 1. Why is that the games industry didn't pick up on this?"

Big as it is, Langdell (appearing today at 3.30pm in room 6 at the Austin Convention Center at Redrum in the Rue Morgue': Collaboration in International Communities) thinks gaming as a business is missing out. "It's a $100 billion industry that's underperforming," he said. The trick is guessing what will work, and the problem has been that the industry has as bad a track record of spotting the next big thing as any other industry.

Take MMOs. "if you'd have asked people in the mainstream game industry five years ago, they would have said that if you got 100,000 on Everquest, that's good going." That meant that investors were wary of sinking cash into them. When it came to Blizzard and the monster that is World of Warcraft, according to Langdell. they struck a deal to basically operate under the radar, and "were able to develop it as a really-high-end independent developer."

What were the shittiest social networking campaigns in recent memory? That's what the panel and audience at the The Suxorz were trying to work out.

2007 was a fabulous year for suckage: the "big ad" (which ClickZ Network's Rebecca Lieb called a great little movie, but a terrible ad, because no-one remembers what the product is. Carlsberg? Carlton? Carleson? Molson?); and Agency.com's horrible effort to get Subway's ad contract with a terrible, terrible, TERRIBLE attempt to bid a viral push for their business-to-business negotiations.

Everyone seemed to hate the idea of selling out blogging and other real networking sites for corporate. There was the horror of pay-per-post, where bloggers schill for corporations and sell out their souls in the name of spammage (Hewlett Packard won for doing this); Molson's desperate attempt to piggy-back off Facebook; the particular horror of the WalMarting across America blog; Whole Food's John Mackey posting on competitor's blogs and talk-back boards; and Cisco making their own Wikipedia entry about their "Human Network" brand (as Jeff Jarvis of Buzzmachine noted, the Wikipedia community corrected this "weeping sore.") Special props for Rudy Giuliani for not allowing friends on his MySpace page. Genius.

But wait: if this is a bunch of strangers sitting around and bonding over failed social networking strategies, isn't this panel social networking? Gah! Snake eating its own tail! Gah!

If you're feeling left out of the hardcore geekiness of the Interactive festival, don't forget, the Screenburn Arcade is open to the public 12-6pm, Saturday and Sunday, at the Convention Center. Last year, by the way, it was blag and swaggerific. Heading there right now.

Endless lines of people that wrap around the building, cyber geeks of every shape and form, and 30-pound bags full of marketing trash – the madness has begun.

I jump-started this year but hitting events back to back, wasting no time waiting in the halls, verbalizing my résumé to strangers or punching random buttons on my cell phone like I have someone important to call. The first event I attended was at 3pm, Book Reading: The Principles of Beautiful Web Design with Jason Beaird. I expected to pick up some new-age technology tips of designing our online commercialism, but it was nothing of the sort.