i never use it, i paint the default lighting directly to my textures, though i have kept the method (a very simple one) for any use later on.
set up your scene, apply textures to your model, etc. put your skylight down, and turn on advanced lighting as you would.
just don't use any lighting from angles, such as omnis, only the skylight for what the model should look like from any condition.
basically what you have just done with this model, so what i said above was pretty much pointless to you
OK, now go to render > "Render to Texture" (shortcut: '0')
select your model, and any separate parts there may be, that you want baked, which may have different textures, then scroll down and click add:
then choose CompleteMap
as you can see, there is also a bunch of useful stuff, including normal map baking, if you want to make a high resolution version from a copy of the original
Click "Add elements"
now, depending on the size of your texture, click on one of the buttons, highlighting the size of the map you want to bake:
Finally, at the bottom of the window, click "Render"
it may take a while to bake depending on your texture size, your new texture(s) will be placed into the directory specified in the render to texture window, at the top
tell me if it works well for you
