Examine both sides of the knee wall, or pony wall, to ensure that there are no electrical outlets or switches in the wall. If there are, turn off the power to the circuits at your home's main electrical box, and test the circuits with a voltage tester. Remove the outlets or switches from the wall once the voltage tester shows that the circuit is dead.
Lay tarps or plastic sheets on top of the steps and the floor around the pony wall, and close doors to rooms in the vicinity of the pony wall. Close or cover any vents in the area to prevent dust from the demolition spreading throughout your home.
Pry off any molding along the base of the pony wall with a pry bar.
Locate the studs inside the pony wall with a stud finder, and mark their location. Begin knocking holes into the wall in between the studs with a sledgehammer. Pull the chunks of drywall off the studs with your hands. Wear safety goggles, gloves and a mask when removing the pony wall.
Cut through the studs with a reciprocating saw, with the exception of the end studs that attach the pony wall to the surrounding walls. Make the cuts diagonally through the studs a few inches off the floor. Always wear safety goggles when using a saw.
Remove the top ends of the studs from the top plate by pulling them off the nails with your hands. The top plate is the horizontal board that goes across the top of the frame for the pony wall.
Knock the bottom parts of the studs off the bottom plate with the sledgehammer, then cut the nails with the reciprocating saw.
Remove the top plate by sawing through it along the edges of the end studs. Cut through the end studs at a diagonal, then pry the different sections of the end studs off the wall, removing the bottom sections first.
Pry the bottom plate off the floor, and remove the nails with the reciprocating saw.
Patch the walls where the end studs were located with joint compound. Spread the joint compound with a putty knife, smoothing the joint compound with the knife. Thin the edges as much as you can around the edge of the patch so that it blends into the wall better. Allow it to dry, then sand it smooth. Apply a coat of primer and two coats of paint to match the surrounding walls, allowing each coat to dry before applying the next.
Screw the metal brackets from a newel fastener kit to the bottom edge of two newel posts. The newel posts are the posts to which the railings are attached. The fastener kit can be purchased at a home improvement store.
Place the newel posts in position on the floor. Check them for squareness by lining up a framing square with the edge of the steps and placing the newel posts flush against the framing square. Mark the location of the screw holes in the tabs of the brackets from the fastener kit onto the floor. Drill pilot holes into the floor, then screw the posts into position.
Hold a half starting newel against the wall, aligning it with the newel in the nearest corner. Trace the half newel onto the wall. Measure the distance between the half newel and the corner newel, and the corner newel and the end newel. These measurements are used for the top and toe rails of the railing. Have an assistant hold the half newel in position if necessary.
Cut the top and toe rails for the railing with a circular saw. Wear safety goggles when using the saw. The toe rail connects the railing to the floor, and the top rail runs across the top of the railing.
Lay the toe rail that runs between the corner newel and the half newel onto the floor. Place a bracket from a fastener kit on the floor against the edge of the toe rail that will be next to the half newel. Screw the bracket to the floor.
Place the toe rails into position on the floor, and attach them to the floor with finishing nails. These are nails with small heads, which makes them easy to conceal.
Place a piece of blue painter's tape on top of the toe rails and draw a line on it that runs between the midpoint of the newel posts.
Lay two balusters on a flat surface, and position them so that the narrowest points along the balusters are no more than 4 inches apart, for child safety reasons. Measure the distance between the bottom edges of the balusters. Make marks along the line on the painter's tape that matches the distance between the bottom edges of the balusters so you know how far apart to position them. Do this on both sides of the stairwell.
Drill pilot holes into the toe rails that are wide enough to accommodate the pins on the bottoms of the balusters, using a spade bit. Remove the tape from the toe rails after all the pilot holes have been drilled.
Hold the half newel against the wall inside the trace line. Place the first top rail between the corner newel and half newel, positioning it so that the top edge meets the minimum height required by your local building codes. Trace the outline of the top rail onto the newels. Repeat this with the other top rail along the side edge of the stairwell.
Place the end of the top rail against the half newel, aligning it with the tracing. Drill two pilot holes through the back side of the half newel and into the end of the top rail, then screw the rail to the half newel with 3-inch screws.
Place the half newel and top rail into position along the stairwell. Screw the bottom of the half newel to the fastener on the floor, then drive 2-inch screws through the half newel and into the wall, every 6 inches. Drive the screws beneath the surface of the half newel so you can fit button plugs into the newel over the screws.
Drill two pilot holes through the side of the corner newel and into the end of the top rail, then drive a 3-inch screw through each hole to connect them. Drive the screws below the surface of the newel to make room for the plugs.
Install the other top rail to the corner newel and end newel, using the same process. When attaching the second top rail to the corner newel, avoid coming into contact with the screws from the first top rail.
Install the balusters on the back edge of the stairwell by sliding the pins on the bottom edge into the holes in the toe rail, and the top edge of the balusters into the groove cut into the underside of the top rail by the manufacturer.
Place spacers called filets into the groove underneath the top rail between the balusters. Nail the filets to the underside of the rail with finishing nails, then drive finishing nails through the top edge of the balusters and into the bottom of the top rail at a 45-degree angle.
Install the balusters and filets onto the side edge of the stairwell, using the same method you used when installing the balusters along the back edge.
Nail the molding included with the fastener kit to the base of the newels and half newel to conceal the brackets. Place button plugs over the screw holes in the newels and half newel.