Got to run to the airport, so I can't give this thread the response it deserves. In the mean time, check this out....
http://www.lp.org/issues/issues.shtml
Libertarianism is about asking how we can reduce government size and scope to solve problems, rather than expecting that the government solve our problems for us. We accept that government is necessary, but we also accept that it is inherently inefficient. So government should only be used in moderation....only where the free market can't solve a problem.
With regard to your questions about police and roads, etc..... What if there were several large, national private corporations that specialized in providing city-wide security? The free market could ensure that these corporations are efficient. The logic is that they would be more efficient than a government-run monopoly.