#2
Pick some simple Nirvana songs, listen to them slowly, then try to play them on your guitar. When you can do that, pick songs that are slightly harder. Soon enough, you'll have an idea of what sounds are where on the fretboard, and you'll be playing by ear like a champ.
Main setup:

ESP Eclipse
PRS Torero SE
Mesa Boogie Dual Rectifier Roadster head, 2x12 cab
FX: Crybaby Slash Wah, Ibanez TS9x, Mesa Boogie Throttle Box, Boss TU-2, BF-3, DD-3, PS-6, RC-3, etc.