Hold a 1-by-4 vertical against the wall's horizontal framing members and check for plumb with the level. Nail the 1-by-4 to the horizontal framing members with one nail through the center of the 1-by-4 at the top, bottom and at other framing members in between.
Measure over 5 1/4 inches from the edge of the first 1-by-4 to mark the edge of the next. Place the second 1-by-4 on the framing members; check for plumb with the level and nail it in place. Only use one nail at each horizontal framing member location. Continue adding 1-by-4 boards with 5 1/4 inches of space between them along the length of the wall.
Loosen the adjustment knob on the combination square and slide the rule to the mark at 1 inch. Tighten the knob. Place the square against the edge of a 1-by-4 at the top with the 1 inch end of the rule against the face of the 1-by-4. Use the square to mark both edges of all the 1-by-4s at the top and bottom 1 inch from the edges.
Cut 1-by-4 pieces 5 1/4 inches long. Fit the pieces between the vertical 1-by-4s nailed to the horizontal framing members at each framing member. Nail the short pieces to the framing members with one nail at each end. These pieces support the 1-by-8s that fit over the 1-by-4s.
Hold a 1-by-8 vertical so that it overlaps two 1-by-4s and the edges are aligned with the marks made on the 1-by-4s. Nail the 1-by-8 to the framing members with two nails spaced 2 inches apart in the center of the 1-by-8 at each framing member. Continue adding 1-by-8 pieces until the wall is covered.