1. Navigate to Edit > Preferences > Privacy. You'll see several options. Blocking cookies will protect your privacy in many ways, as these are the main ways of keeping up with all of your information on the Internet. Refer to the third definition of a cookie for more information. There are cookies that track the websites you visit, so I recommend either keeping track of your cookies if you have that much time on your hands or disabling them if you are concerned about your privacy.
2. Blocking images usually does nothing but make browsing difficult. There are cases, however, when blocking certain images would help rid you of some privacy concerns. A lot of spammers use images with links to see if you have actually opened the e-mail. If you did, they will most likely continue to send you spam. If not.. well... you know. Blocking images also means that most of the banner ads you see will be gone. I'd recommend setting it to "accept site images", but this decision is best left up to you.
3. Popups are often the cause of these tracking cookies. They can load lots of nasties that you don't want on your computer. I'd recommend blocking them as this will enhance your privacy and your overall browsing experience.
4. If you share K-Meleon with someone else and have not set it up to use different profiles, you may not want K-Meleon to remember passwords for you. You can disable this very easily by going to Edit > Preferences > General and unchecking Remember passwords.
5. To disable flash, you can install flashblock.
7. K-Meleon 0.9 comes with a Privacy plug-in. This plug-in can clear the Cookies, Disk Cache, History, Address Bar History, and Saved Passwords on startup and/or shutdown of K-Meleon. Navigate to Tools > Privacy > Settings and check everything you'd like to be cleared and when you'd like it to be cleared.
8. You can also do this manually by going to Tools > Privacy and selecting Clear [what you would like to be cleared].
You can improve your privacy even more by using an anonymous proxy.