Replacing the Headset
If you're going to replace a headset "by the book," you should have a headset reaming and cutting tool, a headset press, and other weird stuff. In other words, you need a bike shop. But what the heck... Life's an adventure. And lots of bikers replace their headsets at home without disaster.
Good quality headsets have sealed bearings to keep out dirt. Replace your grit-laden old headset with one of these babies, and you're set for life. Headsets are sized to the fork's steerer tube: the standard fork with a 1-1/8 inch steerer needs a 1-1/8 inch headset. A 1-inch fork needs a 1-inch headset.
We're going to treat this old bike to a new sealed-bearing headset. First step, remove the adjusting bolt and top cap with a hex wrench.
If the fork won't go easily, place a piece of wood on top the steering tube and tap gently until it drops away.
(There aren't any threads. The bearing cup just sits in the tube, but it will be tightly stuck.)
Take out the bottom bearing cup in the same way.Apply a tad of grease to the first half-inch of the inside of the head tube, top and bottom. Slide the headset's bearing cup into the head tube. (Be sure you kept track of bottom versus top bearing cups.) Place a block of wood over the cup, and use a mallet or 2x4 to gently tap it into position.
Here's a nice method for getting the bearing cups into place: Get a large (such as 1/2 inch) threaded bolt, two nuts, and a large fat washer (or two) that's big enough to cover the bearing cup. Put one nut on the bolt, then the washer, then the second nut. Position the bolt so the big washer sits on the bearing cup, and tap the head of the bolt gently with your hammer until cup slides all the way into the head tube.
Lube the bearing cartridges with heavy grease. Also lube the top surface of the fork crown race, and the treads of the headset adjusting bolt.
Put the spacers (if any) back, and slide the stem onto the steerer. If necessary, replace the star nut (located inside the fork's steerer tube). If the headset has a different height than your old one, you may need to add or remove a spacer.
When the tension is right, tighten the stem back onto the steerer. Your fork should now turn Like Buttah!