Questionable laydown in 2/4 NL

I had just bought-in to a 10 handed, $2/$4, $200 Max buy-in, no-limit game, the game had been going for quite a while and there were 4 guys with stacks in excess of $500. I have no reads on any of the players, so I assume a typical game. The hand in question had me in middle position (3 off the button).

I hold K [img]/images/graemlins/spade.gif[/img]-Q [img]/images/graemlins/club.gif[/img] and the action went as follows (stack sizes are approximate): one limper from 3 off the big blind ($400 stack), I limp ($200 stack), next guy limps ($250 stack), button limps ($600 stack), small blind completes ($200 stack), and big blind checks ($300 stack).

Flop comes: K [img]/images/graemlins/club.gif[/img]-8 [img]/images/graemlins/club.gif[/img]-2 [img]/images/graemlins/club.gif[/img]

Action is check, check, check to me, I put in a pot-sized bet of $20, one fold followed by a raise to $40 from the button ($600 stack), small blind folds, big blind calls ($300 stack), early limper folds, action back on me. I elect to call since my second nut flush draw looks good and the button might be attempting to protect a weaker top pair than me.

Turn comes K [img]/images/graemlins/heart.gif[/img] so the board looks like this:

K [img]/images/graemlins/club.gif[/img]-8 [img]/images/graemlins/club.gif[/img]-2 [img]/images/graemlins/club.gif[/img]-K [img]/images/graemlins/heart.gif[/img]

I am first to act, I put in $60 with my trip kings, button raises to $120, big blind folds; action back on me (I had a little over $100 remaining in my stack). There was a lot of distraction in the background, so I called for time and tried to recap the action in my head. This was my first attempt at live no-limit so I was a little nervous and unsure. I decided that he must have a small flush and I mucked the hand.

I think that I made a terrible error (if not multiple errors), based on pot-odds, implied-odds, and many other facets but I want to learn from this. I was intimidated by his stack assuming that he must be a good player and would not raise with less than a flush. I would really appreciate anybody's analysis of this hand in terms of what I should have done at each juncture in the hand; most importantly at the crucial moment when I laid it down (which, I believe was a mistake).

If you choose to analyze this hand for me and still have some time I would appreciate any advice you could lend a beginning live player in terms of dealing with outside annoyance while contemplating a hand.

Thanks for any input in advance.