Soak the sago in water for about an hour, and drain the excess water. Chop the peanuts into small pieces in a mixer (don't powder them completely). Heat the oil in a frying pan till it's hot (don't allow it to fume) and add the mustard seeds, cumin seeds, curry leaves and chilies into it. Stir for a while till the mustard seeds start to crackle.
Add the potato slices into the pan and simmer on low / medium heat till they are soft (don't overcook). Add the sago and peanut pieces into the pan, mix throughly, and cook on reduced fire for about 10 - 15 minutes. Add the sugar and the chili powder and season with salt to taste.
Serve piping hot.
Well folks, I have been at it again, and here's a recipe for a delicious West Indian dish. Dieters may want to note that this is a very starchy dish, and is usually eaten on special occasions i.e., while observing so called "fasts" :-).
BTW, khichidi can be roughly translated into pilaf, and the ingredients should be available @ your local Indian grocery store (US residents : try www.namaste.com).