1) Go to the Dreamwidth main page.
2) Click on "Organise" and then "Manage Account":

3) Click on "Other Sites":

4) Click on "Add New Account"
5) Site is "Livejournal", enter your LJ account name and password. Make sure "Crosspost by default" is checked if you want to crosspost all of your entries, and tell it you want to display cross-post links if you want your post on DW to show a link to the LJ one. Set your security to however you want it set up - not that this is the _minimum_ security. If you post privately on DW it will still be private on LJ, even if your minimum security is "Public". Mine is set to Public, so that my public posts are visible on both sites. Then click on "Create":

6) Assuming that you want people on LJ to be able to comment, make sure the "Disable comments on crossposts" box is unchecked. I like having a footer that tells people that (a) there is a post on DW, and (b) that there are comments there (if there are), so that they can go take a look if they're curious. If you don't tell people how many comments there are, they wouldn't know what they were missing out on! Therefore I have "Add the footer" set to "Always", and the following as the footer:
<hr>
<A href="%%url%%">Original post on Dreamwidth</A> - there are %%comment_image%% comments there.
7) Click on "Save".
That's it!