Try this video for an step by step view of how to spool knit:
http://www.youtube.com/watch?v=MIk4ZwMnuH8&feature=re...
If you still have difficulties, try stopping by your local yarn or craft store (go big box if you have no better alternatives in your area). You'll probably also find that there are friends or neighbors who used to spool (aka french) knit who would be happy to help you and your child learn the art! (You can also check out videos on finger knitting-- same basic concept, but you use your fingers instead of the pegs on the spool.)
It takes some time and determination to get the hang of it and it won't really look like much of anything til you get 5 to 10 -or more- rows completed, so the two of you will need to work on it a little while before you see any encouraging results. And even then, you'll probably not want to do much with your first attempt. On the bright side, if you don't split the yarn too much, you can simply take your first attempt off the spool, unwind it and start over with the same yarn.
My 8 year old started a spool project about a year ago is only about halfway done. He finds it frustrating after a while and sets it aside for months before picking it up again. However, he's learning some great things from his efforts, so it's all worthwhile. Just give it some time!
If you need any other advice, feel free to contact me via Mamasource!