Create a solid foundation for your wall. If possible, do this by digging a trench down to bedrock. At minimum, the wall needs to be seated below the frost line to prevent heaving and cracking.
Pour a concrete footing on which the bottom course of concrete blocks will rest. The footing should be at least 6 inches wider than the blocks to distribute the weight.
Spread mortar over the surface of the footing and lay the first course of concrete blocks. Spread mortar over one end of each block as you set it in the line of blocks and tap it into place with the handle of the trowel.
Add more courses of concrete blocks on top of the first one, staggering the vertical joints between blocks so that each block rests on top of the joint between the two blocks beneath it. Check the level of the wall with each course using a 4-foot level.
Add courses of concrete blocks until you have reached the desired height of the wall.
Backfill the trench in which the wall is sitting, compacting the soil around it to strengthen it.
Attach flat rocks to the face of the concrete block wall by spreading mortar over the face of the wall and pressing the flat rock into it. Use rocks with a straight edge and attach them so that the straight edge is flat on the top. By doing this, you create a solid resting spot for the next rock that will be applied.
Cap the wall with a row of large flat rocks that cover both the concrete blocks and the flat veneer rocks, creating an attractive finish and helping to keep water out of the interior of the wall.