Even though this dining room (Image 1) may look standard, there are four moldings with different starting and stopping points. And for this particular job, the door casing will be left alone because it ties together with the crown molding at the top of the walls.
First remove all of the furniture from the room to have plenty of room to work.
Begin by scoring the top and bottom edges of the chair rail with a utility knife (Image 2). Also score the mitered corners and the ends that butt up to the door casings to make it easier to remove.
Slip a flat pry bar behind the chair rail and pull it off the wall (Image 3), and work around the room removing the chair rail and base molding.
Finally, scrape away the old wallpaper left underneath the chair rail.
Always work "below" the chair-rail line. That way, if you do mar the walls, it will be covered by the new wainscoting.
The horizontal framing -- or the rails -- goes from corner to corner, which is a no-brainer. But you must figure out the spacing for the panels and the vertical framing -- or the stiles. Also consider the outlets in the room; they need to fall on a panel instead of a frame.
Start by measuring 5-1/2" off the floor, and then use a level to draw a line where the new base molding will go (Image 1).
Measure the height of one of the dining-room chairs and determine how high off the floor the chair rail should be. Measure up the wall in one location, and use a level to mark the second horizontal line (Image 2).
With both the base molding and chair-rail lines drawn, measure the length of the walls to determine the size of the panels. Divide the length of the shorter wall by four to determine the width of each evenly-spaced panel. Mark the vertical lines with a level to keep them plumb.
Note: The stiles will hide the seams of the panels, so their location is critical to the layout.
Once all the walls are marked (Image 3) you can see where the outlets are going to land and make sure you're happy with the layout.