You can make frets from wire (see me if you need some, or use coat hangers).
Saw a shallow and even groove where the fret should go, then glue in place.
Or, you can just pencil mark the frets on the neck and use it as a slide guitar (below).
If you want the easiest possible way to play, I suggest making it a slide-guitar. Tune your strings so they form a
major chord,
which means the lowest string is the fundamental (e.g., C), the next
string is a major 3rd above (e.g., E), the next is a 5th above (e.g.,
G), and if you have a fourth string, tune it to an octave above (e.g.,
C'). So, C-E-G-C' works, as does any other
Root-Major3rd-5th-Octave combination. Many songs only use
major chords, but if you want more flexibility, try tuning to C-G-C'
(or any Root-5th-Octave): this will not differentiate major
from minor.
To play a slide guitar, you'll need a
slide:
a metal or glass cylinder, tube, bottle, or bolt as the slide.
The slide is placed on the strings above the desired fret. You
only need pencil lined frets, to know where to put the slide. The
slide will define the contact point as a node and the string will
vibrate between it and the bridge.
http://en.wikipedia.org/wiki/Slide_guitar
If you have a 6 string guitar, or want to play your 3-4 string like a
standard guitar, the standard tuning is E-A'-D'-G'-B''-E''.
The first three intervals are all 4ths (5th fret). Then the G-B
interval is a major 3rd (4th fret). Then the B-E' intervals is
another 4th (5th fret).
To achieve this 2 octave range, you will need real guitar strings with wire-wound base strings (extra weight for low notes).
A google on "guitar tuning" will bring up a number of sites; this one has reference tones:
http://www.8notes.com/guitar_tuner/
Note that nylon strings slowly stretch (viscoelastic relaxation) for
the first week or so, so you need to retune until they are stable.
If you go with steel strings, I suggest using Lights or Extra Lights, to not strain the neck too much.
(our lathes are "Birmingham", but they are ~identical to the Grizzly).