How to document your project
Your project may take longer than you expect. Most projects will change owners multiple times during a build and sadly many end up as junk. Get a grip on that initial enthusiasm and document every step of transforming that pile of rust, dents and missing parts into your dream rod. Your hotrod will be unique, so it needs a unique service manual. Who better to create that than you? You may desperately need that manual when something interrupts your project for an extended time. Also, if and when the time comes to sell your car, proper documentation will be very appealing to any prospective buyers. See, for example: Mustang II ...which year?.
 Planning and disassembly
For details on planning and disassembly, see this article by Centerline, posted on the Hotrodders Bulletin Board: New project? Before turning a wrench, get organized!.
Get a good digital camera. Make sure it can do macro closeups. It's also handy to have one that focuses in low light, since you will be crawling into all the little crannies of your project. Get enough storage for the camera so you don't have to worry about counting photos. Likewise for batteries. Forget claims of "digital zoom"; you can do the same type of "zooming" with image editing software. What is important is optical zoom, the quality of the lens, color correctness and image size (misnamed "resolution" in many advertisements).
Take lots of photos. Many may turn out to be useless, but you can't tell what information you may need, years from now. Digital photos are easy and inexpensive to store. Begin with a walk-around, taking photos from every angle. Crawl around, in, and under the car, taking photos of the way it is before you begin work.
For technical details on properly photographing your car, see this article by MARTINSR, posted on the Hotrodders Bulletin Board: Basics of basics: photographing your car.
Save those photos as they come from the camera! Any editing of the images should only be done on copies, not the originals. Keep backups, whether they are on CDs or DVDs that you give to friends, or posted online.
Get a good photographic record of the car as it stands before the project begins. Get closeups of any identification plates or decals.
Discipline yourself to grab the camera before grabbing any other tool. Each time you intend to work on the car, photograph the area of your intent. Think about the best service manual you've ever used and imitate the photography and illustrations. You need to be able to show, in your pictures, how and where each part is attached and how it comes apart.
Remember that cameras capture light, not intentions. Show the photos to others who know about cars. If you have to explain the photo, for example, "There is a bolt in that dark spot", it's a failure. A progression of photos matching the progression of work will increase the odds of getting all necessary information recorded.
 Logging progress
Keep a diary on each car that you are building. When you finish a day's work on the car, make an entry into your diary. Enter part numbers of parts that you used, as well as what the parts were originally supposed to fit. Record the prices of each part, as well as the type of fasteners you may have used, and their torque specifications. Don't forget to write down the part numbers of paints, primers, and other finishes or materials. If you end up paying out any labor, write it down. Write down a detailed description of any modifications as if you're explaining them to a non-technical friend. Include many photos.
Following each day of work on the project, gather the photos, pick the best, edit copies as needed, and describe, in text, what those photos are about. The better the description, the better organized your photos will be. Be sure to organize your photos in folders and label them Body, Motor, Transmission and so on.
One of the very important part of documentation is the keeping of a file with all the receipts and title or titles of parts cars so you have proof of ownership. This will be very important should one have to get the car inspected for title and registration.
You can use online software to easily make a photojournal of your project. One such example is the Hotrodders.com Project Journals.