Begin by installing the baseboard, which is the most critical piece for ensuring that all of the other pieces line up properly. Use a level to make certain that the baseboard is installed perfectly level and parallel to the floor (Image 1). The baseboard serves as a foundation for the wainscoting panels and other elements.
Once it is aligned and level, attach the baseboard to the wall using an air-powered nail gun (Image 2). You could also use a hammer and ordinary finish nails, but the power nailer will make the job go much more quickly. Use about two nails to hold each section of baseboard in place.
With the baseboard installed, begin installing the individual bead-board panels using construction adhesive applied to the back corners of the panels (Image 3).
The beadboard panels rest on top of the baseboard, and the pieces fit together snugly using the tongue-and-groove edges. Make sure that the corner piece fits tightly against the corner of the walls. With adhesive on the back, press each section in place, then anchor it for extra holding power using a couple of brads. Continue installing panels along the length of the baseboard.
Once all of the panels are installed for a particular section of the wall, add shoe molding at the bottom of the baseboard (Image 1) as an attractive trim that will also conceal any gaps. No adhesive is required for the shoe molding. Simply attach it to the baseboard using a brad every few feet.
With the paneling and base finished, install the top molding. The top piece rests on a ridge along the top of the panel segments (Image 2). The adjoining corner pieces fit together at the corner of the walls since the top pieces are miter-cut for a snug fit.
Simply slide the top piece in place (Image 3) and, when it's aligned properly, secure it to the wall with the brad nailer.
The finishing touch is the crown cap that fits along the top molding. Secure it with the brad nailer as well.
Caulk any gaps at the corners using painter's caulk. The dried caulk can later be painted over to match the paint of the molding.
Use a jigsaw to cut out any openings in the bead-board panels that may be necessary to accommodate electrical outlets.