I have created a custom dialog and a layout xml:
Dialogs need the signature
dialogClicked(DialogInterface dialog, int id) { ... }
android:onClick="method" is pretty cool, but it doesn't work on Android 1.5 so I am avoiding for some time.
An easy workaround:
Make your Dialog an Activity and use android:theme="@android:style/Theme.Dialog" in you AndroidManifest.
system looks for the method in the where the layout has been inflated from, or in the activity class to which the xml was set as content.