So I tried it using the napalm as my fuel source ( http://www.instructables.com/id/EL4U3X42BHERIE32Y7/ ) and it actually worked. Unfortunately it really was quite weak, so I tried to increase the magnetic field and it worked much better.
I'll show how how to do it both ways.
1. Fuel (I used Napalm of course)
2. Two metal electrical boxes (Don't ask me what each one is called, just look at the pictures)
4. Can to keep the fuel in (I used a tealight candle)
6. Compass (My knife had this built into the handle, make one yourself if you don't have one: http://www.instructables.com/id/EKL14VGJOSEP287U3F/ )
7. Strong, flat rock (or an anvil if you got one)
8. Large Magnet (This is needed for the stronger magnet, I used my 6x8 speaker magnet)
9. Pliers or tongs
Look at my paint drawing to get a general idea of the setup needed. Isn't it cute?
Warning: Boxes and steel will get hot. Use care when playing with fire.
Step 1: Setup the furnace and let it cook
1. Place the fuel source in the center of the larger metal box and light it. Let this burn for about 30 seconds and then quickly put the top of the furnace on top of it.
2. Postion the steel across the top of your mini furnace and let it heat for a while. (Video below)