Are you sure you're editing the right layout.master? It should be inside \data\sites\[sitenumber]\skins\[nameofskin].
If you're editing the correct skin, login to the site in question, set the skin as the site default and then go to Administration > System Log and click the clear log button. After clicking the clear log button, if there is anything in the log, you have a problem with your layout.master (ie you have an invalid server control somewhere).
HTH,
Joe D.