Well, there is no one single way I do it because I try to tailor what I do to the type of rifle and how it will be used. So let's break it down by type of rifle.
Standard Rifle aka Infantry Type rifle, including a Walter Mitty Rifle:
On real G.I. M14's, we just slapped on the handguard and replaced it when it cracked or chipped too much. We did not generally have good epoxy compounds to fix cracks back then. However, since I've learned from NM rifles how fitting a handguard is helpful to accuracy, there are a couple of things I do on handguards for these rifles.
The first is to ensure when the handguard is pushed all the way forward, there is just a tiny bit of space between the front of the receiver and the rear of the handguard. It doesn't take much space at all, as long as you can hold up the handguard on the barrel and see light between the receiver and rear of the handguard, you are just fine. If you can't see light, then file a little off the REAR of the handguard until you can just see light.
The second thing is I prefer to have some light between the bottom of both sides of the handguard and the top of the stock on both sides WHEN you press upwards on the front of the stock while holding the barrel steady. I usually grab the gas cylinder with my right hand while I push up on the stock with my left hand. You must press the stock as far upwards as it will go. If any point or area along either bottom edge of the handguard touches the stock while doing that, I will clear/file that point or area on each side of the handguard. You can run a pencil line on either or both sides of the handguard when you press the stock upwards to use as a guide on where to file it.
In the past, Bill Ricca has kindly posted pictures of the rectangular black rubber like G.I. spacer that was glued to the underside of the rear of the handguard. This was meant to keep a loose handguard from rattling and keep the handguard up off the barrel. I never saw one of those things on Active Duty in the Corps, but I heard of them even in the late 70's. However, those things are rarer than hen's teeth and no one I've ever ran across had one other than Bill. He does NOT have any to sell to my knowledge.
Now, on a standard rifle, you don't need one of those spacers or even using the silicone some folks use. However, if one wants to use either, then go for it. My problem is I personally don't know the best silicone to use and maybe someone else can chime in.
Though we didn't do it on G.I. rifles, I've come to prefer to use gas cylinder shims even on standard rifles. It does NOT hurt reliability in any way and it keeps the gas cylinder from bouncing around and takes a little stress off the barrel threads for the gas cylinder lock.
I usually don't heat and bend up the handguard tabs of the front bands on these rifles as the handguards usually fit tight enough, though a little loose.
NM rifle with standard G.I. "light barrel" or regular barrel contour, IOW not a medium or full heavy barrel:
First you clear the handguard as mentioned above. We put a little more open clearance between the rear of the handguard and the front of the receiver on NM guns. About 3/16" was the average. For these rifles we glued both the front of the handguard to the unitized front band and glued the clip to the handguard.
We heat and bend up the tabs of the front band. I have come to shorten the ends of the tabs just a bit before bending them, to ensure they won't interfere with gas cylinder shims. I use a cutting disc to cut them maybe about 1/8" shorter. Then when I heat and bend the tabs, I keep in mind how close the ends of the tabs are to the top hole in the front band. You want to keep the ends of the tabs back between 1/16" and 3/32" from the hole so they don't tighten against the shims or bugger up the glue job.
Now, after you bend up the tabs, you have to file/fit the front of the handguard so it will go in the front band all the way forward. I DO mean all the way forward where the very front of the handguard is touching the "plate" area of the front band. This will make a stronger joint when you glue the handguard. You have to file and check the bottom of both sides of the handguard lip to get the handguard in so it will go all the way forward. You also usually have to file inside the bottom edges of the handguard to get it to fit in all the way. As to how tight the lip of the handguard should fit into the front band - I don't recommend a tight fit. A tight fit will add a stressor or negative node of vibration to the barrel during firing and may/will cause a little loss of accuracy, though for most people they may never notice it. I fit the lip so it will go into the band without any tight spots. Then you roughen up the lip so glue will stick to it.
You take off the handguard band and roughen the area of the handguard that the clip fits over. This to ensure the glue will stick to it. Then you roughen up around the inside of the top of the front band so glue will stick to it. Then I roughen the inside of the front band where the handguard lip fits into it. I use small rotary stones or carbide cutters in a handy grinder or dremel tool to do this.
The ONLY glue I use to glue the handguards is Hysol Epoxy Patch Kit 1C (White color) or 11C (black color). Even though we used this even when I was first learning how to NM condition a rifle back in 1973, there is no glue I've ever run across in all this time that is better. Loc Tite bought the company that makes this stuff years ago and you get it from them or their distributors. The problem is if you order it from Ellsworth or Wassco, you have to pay an MSDS charge and MSDS handling, so you have to buy enough kits to spread out those charges. I've never been able to find the black !!c kits sold in single quantity kits. You may be able to order a single white 1C kit here without those added charges.
http://www.shoplet.com/Loctite-1C-Hysol-Epoxy-Adhesive-83200/SEPTLS44283200/spdv
OK, this is running long, so will have to go to Part II.