In order to get the picolisp-mode working correctly you have to add the following expressions to your .emacs and adapt them according to your set-up:

(add-to-list 'load-path "<path-to>/picoLisp/lib/el")
(load "tsm.el") ;; Picolisp TransientSymbolsMarkup (*Tsm)
(autoload 'run-picolisp "inferior-picolisp")
(autoload 'picolisp-mode "picolisp" "Major mode for editing Picolisp." t)

If you have also SLIME installed, it will suck all possible lisp extensions up (greedy bastard). So in order to get the correct file-association for picolisp files you'll have to also add this:

(add-to-list 'auto-mode-alist '("\\.l$" . picolisp-mode))

If you want, you can add a few hooks for convenience:

(add-hook 'picolisp-mode-hook
   (lambda ()
      (paredit-mode +1) ;; Loads paredit mode automatically
      (tsm-mode) ;; Enables TSM
      (define-key picolisp-mode-map (kbd "RET") 'newline-and-indent)
      (define-key picolisp-mode-map (kbd "C-h") 'paredit-backward-delete) ) )


By the way, don't forget to patch your paredit.el (v21) with the patch provided to get a smoother editing.
