The products menu will usually be the second box along the left side of the browser window.
Click "Add new product". The "Add Product" page will open.
Select the main category you want this product to appear in from the drop-down list. You can select additional categories from the list below. If you want to select more than one additional category, hold down the ctrl button (Windows) or command button (Mac).
Below this you can fill in the name of the product, the SKU, a description of the product, price .... If you know html, you can style the description by using tags for lists, headers etc. If you don't use html, plain text is fine. You can make line breaks by hitting the return/enter key.
Be sure to click the save button before adding an image. To add a picture, click the "Change Image" button near the top of the page. NOTE: This will not work if you have a popup blocker on.
Browse to find the file on your local computer, then click "Apply". In general, it is a good idea to keep your images under 300 pixels wide (A tutorial on basic photo editing will be added at a later date). The "Image Selection" window will close. NOTE: You must click the "Save" button to save this image as the product thumbnail.