Installing a headset involves several steps. The first part of a headset to install is the race. The race is an aluminum ring that sits on the top of the fork that the bearing rests on. It is difficult to see in this image, as they're both the same color. The race is a pretty tight fit on the steer tube, and you can see some of the scrape marks from where I had to (gently) tap the race on:
Once the race was installed, I could easily measure the steertube for the final length. I accounted for the stem, the guide and several headset spacers.
Cutting the steertube
Once that was cut I filed down the edge so the stem and spacers would fit over nicely. I would normally tap in the star nut with the provided screw, but saw a demo about using a screwdriver for more leverage. I ended up using one like this:
Installing the star nut
Once it was put in the top of the star nut, it was easy to tap into the steer tube. The danger is that the star nut will get in sideways, but with the increased leverage of the longer screwdriver, that was easily avoided:
Installing the star nut pt. 2
The nut goes down into the top of the steer tube about a half inch. The screw is about an inch and a half long, and will reach this easily. I took care to be sure that the star nut was straight so the screw would thread in easily.
The star nut installed
Measuring the steer tube with the top spacer of the headset and the stem on. This indicates how many spacers I'm going to need. It looks like about 3/4" worth. Spacers typically come in 1/4" and 1/8" thick increments so that you can get the top cap of the headset snugly on the stem.
That's about it - only thing left is the spacers. Once they're on, tightening the hex nut through the top will compress everything and it'll be ready for a ride! (except for wheels, cranks, handlebars, seat... pretty much all the other parts.)