All the right tools, but where to start?

I would put it where it fits. No need to start doing something that does not relate to my knowledge unless it has to be done! Hope this helps!

You first need to figure out what your "business" is, or will be. If you just want to dabble and make a few bucks, you could do some affiliate sites etc but if you want to start a true business, that is what you need to figure out.

Internet marketing is not a business, it's a method of marketing/advertising your/and other people's products and services.

If you are wanting to start a real biz, you might think about starting a service.

Internet Marketing is nothing more than a method for marketing a product or service. If you enjoy creating websites, working with different CMS programs, and all that, then I would suggest taking what you already know well and marketing your services.

If you can create great Wordpress themes, then Themeforest.net is a great option for you. If you're familiar with PHP and can develop awesome plugins, there is always a market for that.

Really, it all depends on what you want to do. Pick something you enjoy, and market it to a specific niche. I could probably come up with a half dozen ideas for wordpress plugins that would do quite well just right here on the Warrior Forum.

With your knowledge there's all kinds of approaches you could take. In addition to the good suggestions above, you could blog about developing themes and CMS. That's not a bad market at all. You could niche down to a specific industry or type of website. You could use your blog to sell your products or promote other products as an affiliate (or both).

If you have other interests, you could develop a blog/product (or both) revolving around that niche/interest.

My preferred method of monetization is promoting as an affiliate and earning commissions. I blog daily and am active in 6 niches. That's what I do ... blog, build traffic, run e-newsletters and promote great products I like in the niches. Note, I don't just promote, I write a ton of non-promotional info as well.

With coding skills, you'd probably enjoy product creation more. I can't code anything other than html and some basic CSS, so I'm left to other methods such as writing and promotion.

3 hours a day is plenty to get started. Don't quit your job prematurely. Revenue in this biz can fluctuate, but in time as you build up your business will stabilize and grow unless something goes awfully wrong, which it can and does, depending on your model (i.e. tanking in the search engines, getting banned from PPC networks, losing an Adsense account, getting banned from submitting work to a merchant site such as Themeforest, etc.

Follow the rules with third party providers on whom your rely. Minimize reliance on any third party as much as possible, or at least diversify.