The way that I got my live query to work, it I split up the assignment and event, IE.
$('#divModal').jqm({ajax: 'add_product.php?id=XXXX'});
$(".img_pencil").live("click", function(e){
    e.preventDefault();  
    $('#divModal').jqmShow(this);
});
                  Dave
                   2009-12-17 21:26:47