Step 1, add elevations to each polyline (select 'properties' for each line and give it a Z elevation).
Step 2, Under the 'Terrain' menu, open Terrain Model Explorer. Under "Manager:, choose 'Create Surface' and give it a name.
Step 3, set the new surface current by right-clicking on it and selecting Open (Set Current). Click the + (plus) sign by the surface name to expands it's list.
Step 4, from the newly expanded list for the new surface, choose "breaklines", and select "define by polyline". The menu bar will prompt you for a description for the breaklines (i.e. proposed contours), and then prompt you to select all of the desired polylines. Right-click when done.
Step 5, right-click on the surface name and choose "build". From the "build" screen, enter a description in the designated area, and from the selection list, choose only "breaklines", as that is all of the data you have to make the surface from.
Step 6, hit 'OK" on the build dialog box and watch the computer process the data.
Step 7, once the computer is done, you can save the surface. To preview the triangles created by this process, from the Terrain menu, select "edit surface" and "import 3d lines".
Step 8, once you are happy with what you created, process the cross sections using both the existing and proposed surfaces (create an existing surface from the existing contours if you don't already have it) and create the cross sections.