1) In one window, open up the blog (or other site) you want to make a widget of
2) In another window, go to http://www.widgetbox.com/
3) I honestly can't remember if you need to create a free account before/during/or after the widget-making process but at some point if you want to save your work, you'll need to sign up. It's relatively painless. And I don't recall getting unnecessary email from the group/company.
4) Click on "My Widgetbox" or "Make a Widget" both of them take you to the same place.
5) Choose the type of content you want...flash, html, web page, blog, gadget. I've only done blogs. So that's what the example will be...click on it. You'll be asked to give the url of the blog or the blog's feed. (Either works)
6) cut and paste and hit continue
You'll then be taken to a new page where you'll be asked to make some decisions on colors and layouts. It's self-explanatory really. On the page they preview what it will look like. And you can definitely play around with it until you've got it just the way you want it.
When you've got it the way you want it...click on "publish blidget"
Now your widget (unless you've chosen otherwise) is part of the gallery there. For example: http://www.widgetbox.com/widget/young-readers?__fsk=1723661044
Your widget can now go anywhere and everywhere that html is allowed :) And it works with so many--blogger, facebook, wordpress, ning, etc.
Just click on "get widget"
You'll be asked what application (blogger, wordpress, ning, typepad, livejournal, etc.) you want to install it on...follow the instructions as you're given...and in just a few short minutes...your widget will be right where you want it!