Determine the height for your wainscot, and snap a level chalk line. Be sure to factor in the height of your existing baseboards with that of the Lincrusta panels (shown: Gothic Dado 36-by-22-inch panel, $300 for a box of five; Wallpapers Plus
). Coat the wall below the line with an oil-based primer to seal the surface, and let dry.
Sponge the back of the Lincrusta panels with warm water, stack back-to-back, and let sit for 30 minutes while they absorb the moisture. This prevents future expansion that could cause the panels to buckle at the seams.
Wipe the back of the first panel dry, and brush on a clay-based adhesive ($28 per gallon; Wallpapers Plus). Starting at an outside corner of the room, set the panel in place. Work from the top down, and use the chalk line and a level to check alignment. Run a felt roller over the panel to remove air pockets, and wipe away excess adhesive before moving on to the next panel. At corners, fill gaps between panels with linseed putty (Crawford's Painter's Putty, $12.50; Shop.com
Once the panels are installed and the adhesive has fully cured—about 24 hours—top with chair-rail molding. Last, prime and paint your new wainscot.