phone will not let you have two(2) "LIVE" folders, so you will have to rename "LIVE" to something else before you rename another folder as "live"
in live folder you would have to have all the icons you want to use + menu.ml file for those icons.
hence, every folder should have at least 12 icons (gif icons) + menu.ml
or 24 icons (png icons) + menu.ml.
i have come across a lot of menu.ml files that were not linked properly to icons used, and unfortunately they are floating all over the internet. in case like this i would make sure i have the backup of the original menu.ml file so you can compare and edit those faulty menu.ml files yourself.
when you rename folder live and before you restart your phone there is a possibility that phone will "see" icon or two(2) from the newly renamed "LIVE" folder, but that in no way is a problem. just turn off and back on your phone and the "glitch" is gone.

one last thing.
you can use original menu.ml file by itself in the live folder, since original icons are stored in the MAIN side of the firmware.