Where is Steady Hand McDuff

If you visit a bonfire or a lit torch in the environment, you use the action button (A on Xbox 360, X on PS3, Enter or Shift+Click by default on PC) to pull out your torch and light it. At a bonfire, you may need to press the "toggle" button (Y on Xbox 360, △ on PS3, N by default on PC) to show the button prompt to light your torch.

When you light your torch, you'll automatically hold it in your left hand, and it will stay lit until you put it away (by switching your left-hand item to something else). If you want to use it again after you've put it away, you'll need to find a bonfire or torch in the environment to light it again.

There is also a consumable item called Flame Butterfly that will allow you to light your torch anywhere by using the item from your inventory.

(And don't feel bad, it took me a couple hours to figure that one out, too.)

You won't be able to level up at all until you get past the Things Betwixt area -- essentially, the tutorial. Past that and through a narrow cave is a town called Majula.

When you first enter Majula, there is an area to the right which has a tall tower overlooking the sea. To the right of that, slightly down the cliff and by a tree, there is a green-cloaked woman known as the Emerald Herald. Once you speak to her, she will relocate to the Majula bonfire. Thereafter, you can speak to her and level up at that bonfire. Unlike Dark Souls, this is the only place you can spend souls to level up.

When speaking to her at the Majula bonfire, be sure to wait for a menu to popup. You may have to speak to her several times before the option becomes available.

As a side piece of advice, if you want to save your souls until you can first spend them, don't go down into the area with the two trolls. This is a difficult encounter for a new character. You can bypass that and come back to it later to fight them.