Common problem for those who never done one of these before! Don't feel bad, tho...that's how the rest of us learned the "trick"!
In order to do this, you need a bolt, or a piece of "all-thread" to run down in the center of the shaft, to lock the telescopic portion of the column. Whatever you use will need to have a small enough head so the tool you have to compress the spring will fit over it...this is where the "all-thread" is handy.
I don't know off-hand what size/thread the locking "star" bolt is, so you'll need to take that with you to the hardware store/lumberyard to get the correct size all-thread. If you have a decent spare bolt selection at home, you may luck out and find one that will work, but you'll need to cut off the head of the bolt.
I have a "tool" I made for this somewhere, but chances are, I'll never find it again! Once I had the right length I needed, I cut a slot in the end for a screwdriver to fit. That is how I tighten it down, and lock the tele part.
I'll look and see if I can find what I have, just for a visual, but....don't hold your breath...it's a jungle out there in my garage!

There is also at least one other thread on this subject here somewhere...I don't remember if there were any more descriptives of the "tool", but there might be...

[QUOTE=77 Red Corvette]So the bolt screws into the shaft which presses on a rod which pushes on the half moon shaped key which jams the telescopic shaft in place ... correct? Just want to make sure that we have this down.[/QUOTE]

In a nutshell, by Jove, I think you've got it!

"And da ankle bone connected to da leg bone, and...."

http://www.C3VR.com/member_uploads/4201_4300/4221/Tool.JPG  here is a picture of the tool I use I beleive you should be able to get it at your local parts store not to expensive worth the money.

That's the lock-plate compressor, which they have. The problem is the telescopic column pulling back when you try to compress the plate. The column needs to be locked first, then the tool will be able to compress the spring behind the lock-plate, and the snap-ring can be installed. This is only an issue with the tilt/tele columns, but it is fairly easy to overcome with a bolt installed in the center to lock the column down.

I would screw the one part onto the threads of the steering wheel nut, then you screw the long center threaded bolt into the threads where the locking star screws into and it locks the column down. Its hard to descibe But this is the tool I used on my 77 tele tilt column to replace the two bearings in the upper portion of the column. these are the instructions that came with the tool 1. remove steering wheel and any components to expose locking plate rraider12008-07-27 09:47:49

Ok...I see your tool is prolly different from mine, as it has a bolt in the center to lock the tele that mine does not. Mine is just a standard lock plate remove/replace tool, and it is not specifically made for tele columns....which is why I have to use the separate bolt in the center to lock it.
Did you actually get yours at a parts house? That's pretty neat.

Just wanted to give you an update. I used your bolt trick and it worked like a charm!

I will try to find out were I bought the tool It had to either be at harber freight or our local car part store Costless auto parts, if it would help I could also post a better picture on your tool you might be able to replace the center bolt with a longer threaded bolt.