I do them by hand using flat chisels, a 2 pound wooden maul, gouges, and scrapers made from worn out files. Proper inletting of the barrel and ramrod channel are critical to good architecture throughout the gun.
Using a marking gauge, and being sure the blank on the lock side is flat, and the remainder of the blank square to the lock side, run a centerline all the way around the blank.
Remove the breech plug. Determine where you want the barrel, in some cases you might need it offset left or right, otherwise she goes dead center of your blank - the ramrod channel will go immediately under the barrel, centered and with whatever web thickness you need. Determine how deep you are going with the barrel, mark your blank and saw (a band saw is great for this) to your lines. After sawing level off the just sawn area where the barrel will be inlet, make sure the wood is square to your lock side and the barrel is aligned front and rear. Reestablish a centerline.
Take your time, do it right, if you have questions then ask.
Inlet the barrel down to the lower bottom side flats, when you are finished you'll have three flats in the wood and are now ready to take it down to a bit over 1/2 the depth of the side flats. The bottom three flats are in, use a knife (or a chisel, lightly) alongside each side flat to mark the outer limits of the barrel, left/right.
You now know where to remove wood to sink the barrel further, at first go very carefully with a chisel, be aware that the beveled edge of the chisel will naturally widen your inlet so light taps with the maul are all you need at first, once you are down about an eighth of an inch you can go faster with harder blows.
Look over this thread by Taylor Sapergia, it shows the basic process of inletting a barrel, I believe you can find others on ALR also;
http://americanlongrifles.org/forum/index.php?topic=37886.0dave