Measure the area intended for the enclosed room. It is preferable to avoid the hassle of re-wiring, so locate the room in an area with electrical access and an overhead light already installed. Plan the room so that the two new walls join the garage's exterior walls at a stud. Use a stud sensor to locate the wall studs, and mark them with a pencil.
Build the frame for one of the two new walls for the enclosed room. Cut the 2x4 studs to create a frame that is rectangular on all four sides, with vertical support studs 18 inches apart. Use 3-inch nails (two per stud) to secure the frame. The frame should reach from the floor to the ceiling.
Build the frame for the second wall in a similar fashion, but leave a framed hole matching the dimensions of the door with its frame. There should not be a stud along the floor where the door will be located, unless there is a deliberate reason for elevating the door.
Lift one wall and slide it into place. Using 3-inch nails, nail the frame to the wall at a stud. If possible, secure the top of the frame to the ceiling or rafters using 3-inch nails as well.
Lift the second wall and put it into position. Secure it to the exterior wall using 3-inch nails, then nail the frame to the open end of the other new wall frame.
Apply paneling to both sides of the newly framed walls. Cut to fit. The pieces should lay flush against each other with no overlap. Use 1-inch paneling nails for this purpose.
Insert a door into the frame. Nail the door frame into the slot in the wall. Ensure the door is level and swings freely on its hinges before securing it to the wall studs.
Install the hardware for the door handle, according to the manufacturer's instructions.