Penzeys (a spice co.) makes theirs from:
salt, black pepper, paprika, Turkish oregano, cayenne pepper, garlic, celery, Mexican oregano, basil, nutmeg, cumin, marjoram, thyme and rosemary.
No numbers are given, and you probably don't need two kinds of oregano, but I've made it before with a similar list, and it is generally insensitive to precise ratios. I'd start with
2x black pepper, paprika, oregano, cayenne, garlic,
1x basil, cumin, marjoram
1/2x nutmeg, thyme, rosemary
bulk up with salt (store-bought stuff is mostly salt), and experiment from there. You can probably find more on google. Add hotter things or anything you find interesting :)
It sounds to me like the issue may be that you're crowding the pan.
Basically, to get everything nice and brown and crispy, you need enough space for all of the steam to escape. That picture you showed has potatoes stacked on top of each other -- that means as the bottom items cook, they're going to end up steaming the items above them.
At a diner, they have a large griddle to work with -- they can really spread things out. You're not typically that lucky in a regular kitchen, as you don't have as much space, and you have a lip on the pans that'll hold the steam in.
So, either work in smaller batches, or consider recipes that use an oven -- using sheet pans instead of a pan on the stove solves much of the problem.
One other trick is that most diners don't start from raw potatoes -- maybe with hash browns, but not for home fries, you're not going to get the nice soft interior in a reasonable amount of time unless you start with a potato that's already been baked or boiled. (If you're doing things in the oven, you might be able to, but not in a pan)
Just for reference ... I have a 14" cast iron skillet that I use for home fries ... and it's about the right size for cooking a single large potato, which might be two servings, maybe three for kids. (I tend to cook carb-heavy meals).
update : I probably should've stated this directly -- you want the chunks of potato to form a single layer in the pan, with space in between them.
Best Answer
Potatoes are very popular in some parts of Mexico. When I lived in Guadalajara, potato tacos were common, usually deep-fried. Diced (and possibly pre-cooked) potatoes with some seasoning added to a soft taco shell, then the entire thing fried together until crispy. After frying, such tacos (whether with potatoes or other filling) were cracked open to add lettuce or salsa or whatever other toppings/fillings might be desired, or salsa might be poured over the top, and eaten with a fork.
One of my favorite local dishes was gorditas, which are basically a double-thick tortilla split at the middle (like pita bread) and stuffed with a filling of choice, and grilled. Diced and cooked potatoes were a common choice, often with beans or cheese as well.
Potatoes are also common in Mexico prepared much the same as they are in the U.S.: Baked, or as french fries, or the ever-popular potato chip. Always with a Mexican flair, usually in the form of extra spicy seasoning or sauces added.
I also had a "Breakfast taco" in Austin, Texas a couple months ago, which had potatoes. So there is some tex-mex food with potatoes, but I think this is probably not as common as it is in true Mexican cuisine. But then, Tex-Mex has never been a very close substitute for true Mexican food :)
My best guess as for why potatoes are not common in Mexican and Tex-Mex restaurants in the U.S. is that potatoes are not considered an exotic/exciting enough food/flavor to be considered "special" by most people who frequent such places.