Step 3: Editor On Fire
Open up your song in Editor On Fire. I'm going to assume you are familiar with the basics of CDLC creation. This part you should be familiar with, there are separate tutorials if you need to follow another tutorial for that such as this:
http://customsforge.com/topic/35318-cdlc-creation-for-rocksmith-2014-remastered/
Now, you should switch to the vocal track and import the SRT file you created from Subtitle edit. Press F5 to view the waveform.
You should see something like this once you browse the song to where the lyrics start.
Now you'll need to select all the lyrics, with CTRL A and left click and drag them to the starting point you identify by listening to the song. When lyrics are selected they turn green, they can be dragged and moved at that point.
Deselect everything after you have the lyrics lined up by left clicking on an empty space in the timeline or by pressing Ctrl-D or going to Edit -> Selection -> Deselect All.
Now highlight the entire first verse (in this example "I heard the news baby") and press Ctrl-M (or Note -> Lyrics -> Lyrics Lines -> Mark)
Now, just go through the rest of the song doing each verse and chorus into groups. Fix any errors like in this particular example there's a bunch of "Hey hey heys" at the end that needed to be adjusted but for the most part the rest should be smooth sailing.
In the end, save your file you'll get a PART VOCALS_RS2.xml that you can use in the Rocksmith Toolkit.
FIN.