lame = boring, rubbish, stupid, waste of time - it's a generally negative colloquial adjective
The literal meaning of lame has developed into a general all-purpose insult. It's more used by teenager, I think:
"Awww mum, do I have to come shopping with you? That's so lame!"
"Nah, that's a lame car, I'd buy an Audi TT instead."
You also hear it combined with "ass" with no real difference in meaning:
"Wow that's a lame-ass outfit, bro!"
I don't think the suffix -sauce materially changes the meaning, but is likely to have arisen as an invented counterpart to the more common "awesome-sauce", which is a general positive adjective, again teenage slang - although a more young-at-heart adult like myself might use it sometimes too!
You most often hear lame among adults descriping an "excuse"; a "lame excuse" is a poor excuse, one that is not believable or not plausible, or one that doesn't seem important enough.
