You can get copies of the FSM and parts manuals at http://colorado4wheel.com/manuals/Jeep/KJ/

Q2 - based on what the local shop told you they are at best lying idiots and I would not go back. The parking brake is nothing but a simple cable activated old school drum brake housed inside the hubs of the 2 rear rotors. My first guess is they pulled the rear rotors and when they were reinstalled they failed to hook up the parking brake cable(s). Alternatively as you suggest the star wheel(s) need attention.

There is cool way to tighten up the parking brake at the handle too. I got mine back to 3-4 clicks before tight. You have to get under the center console, I was able to do it by removing just the storage box. There is a tab on the cable spool that you hold then lift the brake handle up. This will snug up the cable tension.

Need some advice on next steps, without breaking the bank.

Q1) The "Brake" warning light came on, and after brake service by local shop, light is still on. Do I need to use my ODB-II tool to remove error code? If not, what should I consider in finding the problem?

Q2) After brake service by local shop, emergency brake has no braking capability, where before shop visit, it functioned fine. Do I take it back to the same shop, or go have the brakes serviced at another shop, not trusting the local shop?

Background: 2006 Liberty CRD, Sport, ~78,000 miles. I ran out of time to do my brakes before a long road trip. The brakes were feeling weak, and the "Brake" light came on. I took it to the "best" referred, local hole-in-wall auto shop in our small town. I was charged for replaced rotors, brake pads, one caliper (leaking), labor, and extra inspection and testing of the brake master cylinder.

What I got back was no braking capability for the emergency brake, and the "Brake" light is still on. The brakes feel "correct" stopping the Liberty, but no e-brake. Initially, I thought it would be easy for them to adjust the e-brake star wheel, and maybe they forgot. Work began late on a Saturday, and I went back following Monday to discuss with the shop. The owner started in on a song-and-dance about how they don't do emergency brakes. Next, it was that no one uses emergency brakes anymore. Next, none of their customers have any emergency brake worries or concerns. "Car companies don't put emergency brakes on cars, anymore", (quote!) He repeated the above series several times. (Ever see TV shows of shoplifters confronted in the parking lot by store security agents?) I told him I tow trailers, park on hills, and park trailers on hills. The emergency brake was working fine before taking to the shop. I was so shocked at his reply, so embarrassed for him, that I forgot to ask about the "Brake" light.

I assumed that he was not going to accept responsibility, and wanted more money. Then, I started thinking that maybe he pulled the e-brake pads, did not replace, or broke the tightening mechanism. (I haven't checked to see if new rear rotors are in place.) His best offer was for me to leave it over-night, or come back the next day. And leave it. "I'll take a look at it." No urgency or acceptance of something wrong with the work.

The brakes on the Jeep are nearly identical to my 1999 Ford F150, which I have owned since new, and have changed the brakes many times. I understand what is involved. Either star wheel needs adjustment, e-brake lever harness adjustment, or both. That would be easy, as long as brake pads are not missing or broken.

Take it back after already expensive maintenance for "free" follow up resolution, or invest in another (again, unknown quality) standard brake shop and know that the brakes are "right"? (I am NOT paying the local shop extra money.)