Warning! There are many ways to skin a cat and I don't pretend that our way is "better than anyone else!"
Hey Barry- I do the same process for ukes and banjos, so I hope I can be helpful for you here:
1) put the nut in the slot and run a half pencil flat side down over the first two frets, with the lead tracing onto the front edge of nut. then, I flip the neck up so I can trace the edge of the width from the back side with a different pencil. Now I have basic markings for the height and width of the nut. I take it over to the disc sander and first knock the ends off so it is the right width. Then, I sand the top of the nut down so that it has just a sliver of white above the pencil line.
2) I put the nut back in the nut slot and mark where each slot should go using this:
http://www.stewmac.com/shop/Tools/Straightedges/String_Spacing_Rule.html?actn=100101&xst=3&xsr=433
I then start the slots with this:
http://www.ebay.com/itm/NOS-6-1-4-G...567?pt=LH_DefaultDomain_0&hash=item46166b58d7
Then I pull out a feeler gauge that is our preferred nut string height (I would have to check what the number is) and place it under the slot I start with. I then slot with a nut file at the same angle of the headstock till the file touches the feeler gauge. Move on to other three strings. I set the nut aside for a moment.
3) Our saddle blanks are too tall on purpose and we use a radiused fret board. (fyi, the flat pencil above traced the radius on to the nut, so we are all set with that) So first, I just trace the radius on the saddle blank with this:
http://www.lmii.com/products/tools-services/radiusing/concave-radius-gauge
and hit it on the disc sander. I then take the slotted nut and radiused saddle to my vice and shape them with small files. To finish them off I sand them with 220 and 320 grit by hand so they are smooth and show no file marks.
4) I then install pickup, tuners and tweak fret work. When that is done, I take them back to the uke and put them in place. I string up the first and fourth strings and check the action height at 12th fret with this:
http://www.stewmac.com/shop/Tools/Straightedges/String_Action_Gauge.html?actn=100101&xst=3&xsr=1602
Note that you have to still be able to see the line a small bit under the string. We wan't .080-.090 for ukes at 12th fret. 5 string banjos I prefer more like .110-.120. If it measures at .120 on a uke, then I want to take off a bit more than .030. I place the saddle in one of these:
http://www.lmii.com/products/tools-services/measuring-tools/nut-saddle-setup-gauge.
I then trace the depth I want on the saddle, measuring up from the bottom. first slot in this jig is .015 off, second is .030 off, etc...Now I take it to the disc sander and remove to the line. Note, this is taking off the bottom, so the radiused, sanded and shaped top edge stays looking good.
5) I take the saddle back to the uke and install. I recheck the action to make sure it is .090 or lower. I add the other strings and tune up to pitch.
6) I go to the nut area and fret the string at the fifth fret. I then tap the string down at the first fret and see how far it has to travel to touch the fret. You have to develop a touch for how much is too much and too little. Note: using the half pencil and feeler gauge from before has gotten us very close. If anything, I may need to file a few strokes in a nut slot to get it down to where I want.
7) I recheck all four strings with the action gauge and lower the saddle if need be. I then tune it up and check for buzzing, muted notes or any other issues. I play for ten minutes or so and tweak anything else as needed.
Yes, I know that all of these gauges and tools and files seem expensive and redundant, but when you have done this 500+ times it all adds up and makes sense. I start every shop day with a setup like this and it usually takes 1-2 hours for fret work, nut, saddle, tuners, pickup, strap buttons and tweaking. Nut and saddle take me about 20 min total.
Warning! There are many ways to skin a cat and I don't pretend that our way is "better than anyone else!"