Here is a guide to answering a lot of the questions you might have about NEM multisig.
Thank you to Mixmaster for helping me clear up some points.
Old wallets and passwords from previous versions of NEM prior to 0.5.4 should be discarded. They won't work well with this update. If you have any problems getting NEM started, please read here for more information about trouble shooting.
https://forum.nemcoin.com/beta-launch-discussion/nem-beta-0-5-4/
Once you log in, you can see the name of your wallet in the top right hand corner. Your actual account (seen on the top left side) does not have a label yet, you can create one if you wish by going into Address Book. It is not necessary to label an account, but I like to do so for clarity.
To label an account in the address book, copy the account number, click on Address Book, and then click “Add contact”.
Next fill in the account number, private label, and wallet password. You will find that your account has now been labeled.
Ask somebody to send you some XEM to your account number, or send some to yourself.
https://forum.nemcoin.com/beta-launch-discussion/post-your-nem-0-5-4-beta-address-here-to-receive-test-xem/
On the top left of your screen next to your account number you can see a gear icon, please click there and choose the option “Create New Account”. You can later use this account to be a cosigner on your new multi-sig account. Please create as many new accounts as you want to be cosigners.
An important aspect of the NEM multsig feature is that the account that initializes the multsig loses its ability to send transactions.
So from that time on it is no longer possible to send a transaction from that account.
In the following example Alice has decided to make her account a multisig account. She has added her three sons to the account. Each son is named Bob.
So now in this example I have clicked on the gear icon and clicked “Create New Account” three times to make accounts for the three Bob’s. I will go ahead and label them in the address book for clarity. (When making new accounts, always be sure to back up the private key. In the NEM test net this feature is not possible, but it has already been activated in the Beta for release with real NEM and can be explored by going to the gear icon on the upper left of the screen and clicking “Create Real Account Data” )
Luckily for Alice, she can see that somebody has given her 100,000 XEM. Since this is a lot, she definitely will go ahead and stick the XEM into a multisig account.
Within a few second’s from a third party sending Alice XEM her NEM client will show she has received a deposit, but it will be labeled as pending. She has to wait at least 0 confirmations before she can now set up multisig because the XEM deposit hasn’t yet been confirmed by a block.
To make a multisig account Alice clicks on the gear icon on the upper left of the screen and then clicks on “Convert to multisig”. She knows by doing this, she will lose all power to send XEM from this account and now only the cosigners will be able to send.
She then adds addresses for the three Bob’s.
TAIEQJ-GSQRGN-RPRZ3H-QD3V4R-H3LDMK-XTE4MN-SULO
TA3LJL-IHIA2G-JAO22W-YA66PP-G5HP7M-NQZD6H-R34J
TA6IKW-YHPDD4-7HDBDH-7XCNQD-BRSAVR-S6UGDC-DVPD
We can see that NEM recognizes the labels of these accounts if they have been written down in the address book. (When you click convert, the box should close on its own but it doesn’t. This is a bug in this version and will be fixed in the next version. Please wait a few seconds and close it manually.)
We can now see that Alice’s account has been turned into a multisig account designated by a paper clip icon. She can still log in and out of this account, read her messages, check her transactions, receive new deposits, but she no longer can send out XEM. If she tries NEM will remind her that it is not possible to send on accounts that have multisig enabled.
Instead now whenever Alice wants to send a transaction, the Bob’s will have to help her. Any Bob can start and then the other two will need to sign it. In this version of NEM all cosigners must sign, but in future versions this will be adjustable. (e.g. 2 out of 3 have to sign, or 5 out of 9, or any other combination)
In this case Bob A has decided to send money to Chester D from Alice’s account. After he clicks “send NEM”, and next he will need to choose Alice’s account. He needs to click on the arrow on the right side of the box in the section labeled Sender. He is going to send Chester 100 XEM and so after picking Alice’s account, he can click send.
We can now see that Bob A has a pending transaction that is labeled with an “M” for multisig.
If we go and look at Bob B’s or Bob C’s account, it will look a little different. There will be a request on their dashboard to “sign” the transaction. Until both Bob B and Bob C sign the transaction, Chester will not receive the XEM.
While Alice cannot sign, she can see that a transaction has been started and can monitor its progress.
Once it clears Chester can now see that he has received 100 XEM. The transaction states that it came from Bob A and not Alice because Bob A was the one that initiated the transaction.
Once all Bob’s have signed Alice will be able to see clearly that she has not only paid money to Chester but has also paid the transaction fees.
