Measure your walls and moulding to make sure that you will have enough moulding to go around the room and determine where you will use each piece of moulding. Use as few pieces of moulding as possible. According to This Old House, It is always better to use one piece of moulding to span a wall if you can.
Cut the angles at half the angle of the corner of the room; if the angle is 90 degrees then cut your edge to 45 degrees so that the moulding on the adjacent wall will fill the angle properly.
Cut the edges of the moulding. They will need to be spliced at 45 degrees. When splicing the pieces together, nail the pieces together at the top and bottom of the splice. Set the nails into the moulding with the nail setter.
Place the moulding on the wall with the thicker side touching the ceiling. Nail the moulding to the wall through the thinnest part of the moulding; use one nail per foot at the top and the bottom of the moulding. Set the nails into the moulding with the nail setter.
Apply the wood putty to the holes left by the nails. Make sure it fills the holes completely and wipe off any excess putty. Sand the moulding after the putty is dry until it is smooth.