Hi Alibongo
Tell me a bit more about it - are you in LL Foundation at the moment? Are you walking briskly, or is it quite a slow walk?
What you're doing sounds great. Brisk walking is excellent exercise - gentle enough to do while you're restricting calories and carbs, but raising your heart rate enough to make a difference to your fitness levels and general feelings of wellbeing
As for the crosstrainer, you've hit the nail on the head with what you've said - the word "gradual" is the key. As your body gets used to a level of activity, you can add more, bit by bit. Assuming you're still in Foundation, I do think your level of activity is fine, and adding a bit more time on the crosstrainer should be no problem, but take it easy and gradual and listen to your body. Add the extra time bit by bit, and stop if you are feeling dizzy or short of breath. Also, remember the more exercise you do, the more you will need to drink!
Ladylite - actually, on any restricted calorie diet, if you are sticking to it, you are unlikely to be able to build any muscle at all. The main purpose of resistance exercise on a weight loss diet is to protect the muscle you already have, since up to half of your losses can come from lean mass (depending on your regime), but you can seriously reduce this by lifting weights while you diet.
It's very hard to lose fat and gain muscle at the same time, but it can be done using techniques like calorie cycling, which is what one of the girls on this forum is doing (look for a thread called "zigzag diet").