Instructions for DMM 3.1.1 just in a brief manner:

1. set up a DNN installation, containing all modules and providers, you would like to provide translation for
2. log in as host
3. goto "host" menu, item "languages"
4. select the desired locale and click add
5. go to the language editor
6. select the new language
7. traverse through the tree, select all files 
8. translate all items
9. for long texts, you can use the richtext editor using the up-right arrow at the upper right corner of the exit box. Save your changes before calling it [Vicenc: why not saving automatically instead of the warning?]
10. save your changes
11. Change your language settings in your user profile
12. check all admin pages and modules for proper translation
13. correct the translation in the language editor and continue with step 10 until everything is file.
14. to create an installable language pack goto languages in host menu and call action "export language pack".
15. select the desired locale and click export. The language pack will be created in \portals\_default
16. rename the lanugage pack approprite (I always add version e.g.)
17. test installation in another portal.
18. If everything is fine, you can publish it.
19. Collect all complaints about missing items, wrong translations etc.,
20. Alter translation, re-create and publish new version.

Hope this helps.

Sebastian