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Once you've decided on the profile you like, determine which molding should be installed first and used as your base molding. Start in the first corner and measure the length needed for your first base piece, and cut the molding to length. Nail this first board into position and make a mitered cut for the return piece that will be fitting into the corner.
With a coping saw, cut along the molding's profile so you'll have a good clean fitting corner. Locate and mark the wall studs and then drill pilot holes in the molding for every other stud. If possible, drill holes in an area that will be covered by subsequent molding layers. Nail the base piece into position, and recess the nails with a nail set so you won't dent the wood.
Continue drilling and nailing the pre-finished molding in this manner until all the base-level molding is up. Take the pieces that were left over from your miter cuts and glue them into the ends of any exposed board to give the molding a more finished look.