Just recently I configured an internal tool I'm working on to use ClickOnce deployment. It is the first time I've used it and I have to say that it certainly lives up to it's name.
At least for a small, simple application like the one I've been working on, all you have to do is open up the project properties and push the "Publish Now" button under the Publish tab (VB.Net anyway).
It automatically generates a webpage that other people can use to install the application and, if the application is updated, it will automatically reinstall the next time the user opens it.
For the app I was working on, the most difficult thing to figure out was how to include some assemblies I was referencing from the GAC. To do this, open the project properties, go to the Publish tab, open Application Files, and change the Publish Status to Include. When somebody installs the application, the assemblies are automatically copied locally (they are not installed to the GAC).
If you are interested in where the files are installed on the users machine, it appears they are placed in C:\Documents and Settings\<user>\Local Settings\Apps\2.0\. The application will be in a directory with a randomly generated name.