When a neck is severely bowed or the nut is very tight I use a clamp to help straighten it, otherwise the nut could break. First I slacken the strings, then clamp the neck into a slight back bow. I also lubricate the nut before tightening it. The clamp does all the work, and the nut just holds the truss rod in position. Because of the back bow, when the strings are tuned back to pitch any further adjustments can be made by loosening the truss rod nut, not tightening it.
Now's a good time to check for high frets. I use a "fret rocker" to span three frets. If it rocks then the middle fret is high at that point. Sometimes these can be corrected with just a tap from a small hammer. I use a wooden dowel to fit between the strings and just tap. If this doesn't work then the frets were glued in and won't move ... no need to hit them harder.
At the end of the neck nearest the tuners the strings rest in what's called the "nut". The slots in the nut have to be cut at the correct angle and height. If they are too high you will basically have to bend a string to reach the first frets, and chords will be out of tune. If they are too low strings will buzz at the first fret. If they are filed at the wrong angle the guitar won't play in tune. (See the page on "intonation" for more details about this.)
After the neck is adjusted I can check the nut slots by measuring the string heights above the first fret. I used to use feeler gauges but this cool dial gauge is much easier. The special nut files have rounded bottoms and come in a variety of widths to match the strings. Fender recommends a string height of around .020" above the first fret. Some customers like them lower, acoustic guitars can be a bit higher, classical guitars higher still, and bass can go up to .035".
The saddle, or saddles:
Once the nut slots and neck curve have been adjusted the saddle can be adjusted for height and radius. On a Strat the individual saddle heights need to match the radius of the fretboard. With a Tun-o-matic (Les Paul) bridge the radius is pre-set, but I always check the older ones. They can collapse from the string pressure. Acoustic saddles can be lowered by sanding the bottom. I always check the top radius to make sure it matches the radius of the finger board, and correct it if it doesn't. If they are too low they can sometimes be shimmed, but a new taller saddle is usually a better way to go.
Factory spec string height for most electric guitars is around 1/16", measured between the bottom of the strings and the top of the 12th fret. Some customers like it a bit higher. Bass guitars need to be higher, and they need more neck curve as well.
Factory spec for Martin acoustics is 5/64" on the treble side and 7/64" for the bass. This also depends on the relative humidity, as the bridge will drop in the drier months and go up when it's humid, because the guitar top changes curvature.
The last step on an electric guitar is to adjust the saddles for intonation. The strings need to be new for accurate intonation. Using a small screw driver I move the saddles back or forth to adjust for sharp or flat intonation, using a Peterson strobe tuner.
I do this first with a capo on the guitar at the first fret, matching the harmonics to the fretted notes notes at the 8th and 13th frets. This takes the nut out of the equation. Then I check without the capo, matching the notes at the 7th and 12th frets. I don't usually have to correct all the nut slots when setting up the nut, so the ones I didn't work on might still be worn or filed at the wrong angle. If so the intonation will read sharp when the capo is removed, and I'll file them to the proper angle at this time.
When the intonation is correct the saddles will have a Z pattern. They end up staggered by degree, according to the stiffness of each string. The wound strings have one row and the plain strings another. Here's a PRS bridge with the Z pattern built in:
At some point in the proceedings, definitely before doing the intonation, I'll remove the strings, clean and oil the fret board, and polish the frets. I use lighter fluid to clean the fretboard, then replenish the oils with a great product called Fret Doctor which was originally developed for clarinets. On an acoustic I'll also oil the rosewood bridge, and lightly ream the pin holes if the pins are too tight.
When putting on new steel strings always stretch them thoroughly so they will hold pitch. I've seen steel strings that were a year old and still hadn't stretched in, so manually stretching them is a must. (However manually stretching nylon strings can distort them. They will stretch in over time.) For smooth tuning I lubricate the nut slots with teflon oil.
Here's a video of how I install new strings: http://www.youtube.com/watch?v=swnoy_1xHrA
I usually set the pickup heights to factory specs and let the owner fine tune them from there. Factory is around 3/32" to 1/8" below the strings, when fretted at the top fret. Active pickups can go closer to the strings, because they have less magnetic pull.
I check the pots and switches, and if necessary spray them with contact cleaner. I also tighten any loose hardware, and oil the tuners.
It doesn't take much to get a modern guitar finish clean. I first use a damp cloth then follow up with a little lighter fluid to get off any oils. Lighter fluid is safe for lacquer, but I always use it sparingly. I use Stelling Glyde-Cote or similar instrument polish on the back of the neck.
Some older guitars need to be cleaned with Virtuoso Premium Cleaner, designed for vintage instruments where the dirt is imbedded in the old lacquer. (This can take an extra hour or more, so it's not included in the set up price.)
The final step is for the customer to play it. If they want anything fine tuned I can usually do that while they wait.