diff --git a/src/02_build_kernel.sh b/src/02_build_kernel.sh
index c352b2eae..228bd6683 100755
--- a/src/02_build_kernel.sh
+++ b/src/02_build_kernel.sh
@@ -4,8 +4,8 @@ SRC_DIR=$(pwd)
 
 cd work/kernel
 
-# Change to the first directory ls finds, e.g. 'linux-4.4.6'.
-cd $(ls -d *)
+# Change to the kernel source directory which ls finds, e.g. 'linux-4.4.6'.
+cd $(ls -d linux-*)
 
 # Cleans up the kernel sources, including configuration files.
 echo "Preparing kernel work area..."
@@ -33,6 +33,12 @@ else
 
   # Enable overlay support, e.g. merge ro and rw directories.
   sed -i "s/.*CONFIG_OVERLAY_FS.*/CONFIG_OVERLAY_FS=y/" .config
+  
+  # Step 1 - disable all active kernel compression options (should be only one).
+  sed -i "s/.*\\(CONFIG_KERNEL_.*\\)=y/\\#\\ \\1 is not set/" .config  
+  
+  # Step 2 - enable the 'xz' compression option.
+  sed -i "s/.*CONFIG_KERNEL_XZ.*/CONFIG_KERNEL_XZ=y/" .config
 fi
 
 # Compile the kernel with optimization for 'parallel jobs' = 'number of processors'.
@@ -40,7 +46,7 @@ fi
 # http://unix.stackexchange.com/questions/5518/what-is-the-difference-between-the-following-kernel-makefile-terms-vmlinux-vmlinux
 echo "Building kernel..."
 make \
-  CFLAGS="-Os -fno-stack-protector -U_FORTIFY_SOURCE" \
+  CFLAGS="-Os -s -fno-stack-protector -U_FORTIFY_SOURCE" \
   bzImage -j $(grep ^processor /proc/cpuinfo | wc -l)
 
 # Install kernel headers in './usr' (this is not '/usr') which are used later
diff --git a/src/04_build_glibc.sh b/src/04_build_glibc.sh
index ced6095ae..f5152ad60 100755
--- a/src/04_build_glibc.sh
+++ b/src/04_build_glibc.sh
@@ -2,49 +2,53 @@
 
 # Find the kernel build directory.
 cd work/kernel
-cd $(ls -d *)
+cd $(ls -d kernel-*)
 WORK_KERNEL_DIR=$(pwd)
 cd ../../..
 
 cd work/glibc
 
-# Change to the first directory ls finds, e.g. 'glibc-2.23'.
-cd $(ls -d *)
+# Find the glibc source directory, e.g. 'glibc-2.23' and remember it.
+cd $(ls -d glibc-*)
+GLIBC_SRC=$(pwd)
+cd ..
 
-# Prepare working area, e.g. 'work/glibc/glibc-2.23/glibc_objects'.
+# Prepare the work area, e.g. 'work/glibc/glibc_objects'.
 echo "Preparing glibc object area. This may take a while..."
-rm -rf ./glibc_objects
+rm -rf glibc_objects
 mkdir glibc_objects
 
-# Prepare install area, e.g. 'work/glibc/glibc-2.23/glibc_installed'.
-rm -rf ./glibc_installed
+# Prepare the install area, e.g. 'work/glibc/glibc_installed'.
+echo "Preparing glibc install area. This may take a while..."
+rm -rf glibc_installed
 mkdir glibc_installed
-cd glibc_installed
-GLIBC_INSTALLED=$(pwd)
-echo "Prepared glibc install area."
+GLIBC_INSTALLED=$(pwd)/glibc_installed
 
 # All glibc work is done from the working area.
-cd ../glibc_objects
+cd glibc_objects
 
-# glibc is configured to use the root folder (--prefix=) and as result all libraries
-# will be installed in '/lib'. Kernel headers are taken from our already prepared
-# kernel header area (see 02_build_kernel.sh). Packages 'gd' and 'selinux' are disabled.
+# glibc is configured to use the root folder (--prefix=) and as result all
+# libraries will be installed in '/lib'. Kernel headers are taken from our
+# already prepared kernel header area (see 02_build_kernel.sh). Packages 'gd'
+# and 'selinux' are disabled.
 echo "Configuring glibc..."
-../configure \
+$GLIBC_SRC/configure \
   --prefix= \
   --with-headers=$WORK_KERNEL_DIR/usr/include \
   --without-gd \
   --without-selinux \
   --disable-werror \
-  CFLAGS="-Os -fno-stack-protector -U_FORTIFY_SOURCE"
+  CFLAGS="-Os -s -fno-stack-protector -U_FORTIFY_SOURCE"
 
 # Compile glibc with optimization for "parallel jobs" = "number of processors".
 echo "Building glibc..."
 make -j $(grep ^processor /proc/cpuinfo | wc -l)
 
-# Install glibc in the installation area, e.g. 'work/glibc/glibc-2.23/glibc_installed'.
+# Install glibc in the installation area, e.g. 'work/glibc/glibc_installed'.
 echo "Installing glibc..."
-make install DESTDIR=$GLIBC_INSTALLED -j $(grep ^processor /proc/cpuinfo | wc -l)
+make install \
+  DESTDIR=$GLIBC_INSTALLED \
+  -j $(grep ^processor /proc/cpuinfo | wc -l)
 
 cd ../../..
 
diff --git a/src/05_prepare_glibc.sh b/src/05_prepare_glibc.sh
index 1e90f6f89..d91a3ce21 100755
--- a/src/05_prepare_glibc.sh
+++ b/src/05_prepare_glibc.sh
@@ -8,10 +8,12 @@ cd ../../..
 
 cd work/glibc
 
-# Change to the first directory ls finds, e.g. 'glibc-2.22'
-cd $(ls -d *)
+echo "Preparing glibc..."
 
-cd glibc_installed
+rm -rf glibc_prepared
+cp -r glibc_installed glibc_prepared
+
+cd glibc_prepared
 
 # Create custom 'usr' area and link it with some of the kernel header directories.
 # BusyBox compilation process uses these linked directories. The following
@@ -31,29 +33,17 @@ cd glibc_installed
 # |
 # +--lib (glibc)
 
-echo "Preparing glibc..."
-
 mkdir -p usr
 cd usr
 
-unlink include 2>/dev/null
 ln -s ../include include
-
-unlink lib 2>/dev/null
 ln -s ../lib lib
 
 cd ../include
 
-unlink linux 2>/dev/null
 ln -s $WORK_KERNEL_DIR/usr/include/linux linux
-
-unlink asm 2>/dev/null
 ln -s $WORK_KERNEL_DIR/usr/include/asm asm
-
-unlink asm-generic 2>/dev/null
 ln -s $WORK_KERNEL_DIR/usr/include/asm-generic asm-generic
-
-unlink mtd 2>/dev/null
 ln -s $WORK_KERNEL_DIR/usr/include/mtd mtd
 
 cd ../../../..
diff --git a/src/07_build_busybox.sh b/src/07_build_busybox.sh
index 301029e23..3dd7c7dd1 100755
--- a/src/07_build_busybox.sh
+++ b/src/07_build_busybox.sh
@@ -2,20 +2,19 @@
 
 SRC_DIR=$(pwd)
 
-# Find the glibc installation area.
-cd work/glibc
-cd $(ls -d *)
-cd glibc_installed
-GLIBC_INSTALLED=$(pwd)
-cd ../../../..
+# Remember the glibc installation area.
+GLIBC_PREPARED=$(pwd)/work/glibc/glibc_prepared
 
 cd work/busybox
 
-# Change to the first directory ls finds, e.g. 'busybox-1.24.2'.
-cd $(ls -d *)
+# Remove the old BusyBox install area
+rm -rf busybox_installed
+
+# Change to the source directory ls finds, e.g. 'busybox-1.24.2'.
+cd $(ls -d busybox-*)
 
 # Remove previously generated artifacts.
-echo "Preparing BusyBox work area..."
+echo "Preparing BusyBox work area. This may take a while..."
 make distclean
 
 # Read the 'USE_PREDEFINED_BUSYBOX_CONFIG' property from '.config'
@@ -35,6 +34,9 @@ else
   echo "Generating default BusyBox configuration..."  
   make defconfig
   
+  # Set the installation folder for BusyBox.
+  #sed -i "s/.*CONFIG_PREFIX.*/CONFIG_PREFIX=\"..\/busybox_installed\"/" .config  
+  
   # The 'inetd' applet fails to compile because we use the glibc installation area as
   # main pointer to the kernel headers (see 05_prepare_glibc.sh) and some headers are
   # not resolved. The easiest solution is to ignore this particular applet. 
@@ -43,20 +45,20 @@ fi
 
 # This variable holds the full path to the glibc installation area as quoted string.
 # All back slashes are escaped (/ => \/) in order to keep the 'sed' command stable.
-GLIBC_INSTALLED_ESCAPED=$(echo \"$GLIBC_INSTALLED\" | sed 's/\//\\\//g')
+GLIBC_PREPARED_ESCAPED=$(echo \"$GLIBC_PREPARED\" | sed 's/\//\\\//g')
 
 # Now we tell BusyBox to use the glibc installation area.
-sed -i "s/.*CONFIG_SYSROOT.*/CONFIG_SYSROOT=$GLIBC_INSTALLED_ESCAPED/" .config
+sed -i "s/.*CONFIG_SYSROOT.*/CONFIG_SYSROOT=$GLIBC_PREPARED_ESCAPED/" .config
 
 # Compile busybox with optimization for "parallel jobs" = "number of processors".
 echo "Building BusyBox..."
 make \
-  EXTRA_CFLAGS="-Os -fno-stack-protector -U_FORTIFY_SOURCE" \
+  EXTRA_CFLAGS="-Os -s -fno-stack-protector -U_FORTIFY_SOURCE" \
   busybox -j $(grep ^processor /proc/cpuinfo | wc -l)
 
 # Create the symlinks for busybox. The file 'busybox.links' is used for this.
 echo "Generating BusyBox based initramfs area..."
-make install
+make CONFIG_PREFIX="../busybox_installed" install
 
 cd ../../..
 
diff --git a/src/08_generate_rootfs.sh b/src/08_generate_rootfs.sh
index 5945828e9..4e4e276be 100755
--- a/src/08_generate_rootfs.sh
+++ b/src/08_generate_rootfs.sh
@@ -1,30 +1,20 @@
 #!/bin/sh
 
-# Find the glibc installation area.
-cd work/glibc
-cd $(ls -d *)
-cd glibc_installed
-GLIBC_INSTALLED=$(pwd)
-
-cd ../../../..
+# Remember the prepared glibc folder.
+GLIBC_PREPARED=$(pwd)/work/glibc/glibc_prepared
 
 cd work
 
 echo "Preparing initramfs work area..."
 rm -rf rootfs
 
-cd busybox
-
-# Change to the first directory ls finds, e.g. 'busybox-1.24.2'.
-cd $(ls -d *)
-
 # Copy all BusyBox generated stuff to the location of our 'initramfs' folder.
-cp -r _install ../../rootfs
+cp -r busybox/busybox_installed rootfs
 
 # Copy all rootfs resources to the location of our 'initramfs' folder.
-cp -r ../../../08_generate_rootfs/* ../../rootfs
+cp -r ../08_generate_rootfs/* rootfs
 
-cd ../../rootfs
+cd rootfs
 
 # Remove 'linuxrc' which is used when we boot in 'RAM disk' mode. 
 rm -f linuxrc
@@ -44,15 +34,15 @@ chmod -R +r **/*.txt
 # Copy all necessary 'glibc' libraries to '/lib' BEGIN.
 
 # This is the dynamic loader. The file name is different for 32-bit and 64-bit machines.
-cp $GLIBC_INSTALLED/lib/ld-linux* ./lib
+cp $GLIBC_PREPARED/lib/ld-linux* ./lib
 
 # BusyBox has direct dependencies on these libraries.
-cp $GLIBC_INSTALLED/lib/libm.so.6 ./lib
-cp $GLIBC_INSTALLED/lib/libc.so.6 ./lib
+cp $GLIBC_PREPARED/lib/libm.so.6 ./lib
+cp $GLIBC_PREPARED/lib/libc.so.6 ./lib
 
 # These libraries are necessary for the DNS resolving.
-cp $GLIBC_INSTALLED/lib/libresolv.so.2 ./lib
-cp $GLIBC_INSTALLED/lib/libnss_dns.so.2 ./lib
+cp $GLIBC_PREPARED/lib/libresolv.so.2 ./lib
+cp $GLIBC_PREPARED/lib/libnss_dns.so.2 ./lib
 
 # Make sure the dynamic loader is visible on 64-bit machines.
 ln -s lib lib64
diff --git a/src/09_pack_rootfs.sh b/src/09_pack_rootfs.sh
index 8b4094d65..00ce622ee 100755
--- a/src/09_pack_rootfs.sh
+++ b/src/09_pack_rootfs.sh
@@ -7,9 +7,9 @@ rm -f rootfs.cpio.gz
 
 cd rootfs
 
-# Packs the current 'initramfs' folder structure in 'cpio.gz' archive.
+# Packs the current 'initramfs' folder structure in 'cpio.xz' archive.
 echo "Packing initramfs..."
-find . | cpio -R root:root -H newc -o | gzip > ../rootfs.cpio.gz
+find . | cpio -R root:root -H newc -o | xz --check=none > ../rootfs.cpio.xz
 
 cd ../..
 
diff --git a/src/11_generate_iso.sh b/src/11_generate_iso.sh
index d28aea424..e3424cbb0 100755
--- a/src/11_generate_iso.sh
+++ b/src/11_generate_iso.sh
@@ -32,10 +32,10 @@ cp $WORK_SYSLINUX_DIR/bios/core/isolinux.bin .
 cp $WORK_SYSLINUX_DIR/bios/com32/elflink/ldlinux/ldlinux.c32 .
 
 # Now we copy the kernel.
-cp $WORK_KERNEL_DIR/arch/x86/boot/bzImage ./kernel.bz
+cp $WORK_KERNEL_DIR/arch/x86/boot/bzImage ./kernel.xz
 
 # Now we copy the root file system.
-cp ../rootfs.cpio.gz ./rootfs.gz
+cp ../rootfs.cpio.xz ./rootfs.xz
 
 # Copy all source files to '/src'. Note that the scripts won't work there.
 mkdir src
@@ -104,7 +104,7 @@ else
 fi
 
 # Create ISOLINUX configuration file.
-echo 'default kernel.bz  initrd=rootfs.gz' > ./isolinux.cfg
+echo 'default kernel.xz  initrd=rootfs.xz' > ./isolinux.cfg
 
 # Delete the '.gitignore' files which we use in order to keep track of otherwise
 # empty folders.