For using Lazarus 1.0.6 with FPC 2.6.2 there are four main install steps in the following order. Install FPC 2.6.2 compiler, copy FPC 2.6.2 source, change paths to point to 2.6.2, and rebuild Lazarus.
If you skip one of the first two steps Lazarus will complain about files not being found when changing paths.
If Lazarus states that the fpc.exe cannot be found make sure that the compiler is actually installed.
If Lazarus states that the source cannot be found then get the source. Copy the source files to a 2.6.2 folder similar to how Lazarus installed the 2.6.0 source.