Its very easy. Download the latest nightly, Gapps, and the all in one fix by Razorloves.
If you are on Froyo, or a Froyo based ROM, use Droid 2 bootstrap and boot into Clockwork recovery.
Wipe data, cache and go to advanced and wipe dalvik cache.
Then go to install zip from SD Card and then choose the zip file. Install the nightly first, then the other 2 files. Reboot and you are done.
Once you are on CM7 and want to flash a new nightly, just wipe cache and dalvik cache, then flash the new nightly, gapps and all in one fix. You don't have to wipe data.
CM74DX