It's virtually impossible to teach pace noting through a website. The best way to learn is to have an experienced co driver sit in a car with you and make pace notes of a few miles of a twisty road somewhere, then drive over the same road reading back the notes. I'll try to explain the process here to give you an idea of what is involved.
Pace notes are essentially a code used by rally drivers and co drivers to describe bends, junctions, crests, dips, and other features of a road. Pace notes are made at slow speed - usually under 20 MPH - and are read back on the rally in a way that helps the driver drive at very high speeds over a relatively unfamiliar piece of road.
The process of making pace notes goes like this:
The driver and co driver use the road book to follow the route of the rally, usually a day or two in advance. Road books are quite intuitive to follow. The small diagrams known as "tulip diagrams" show directions at a given junction or feature. You approach from the circle end and depart in the direction of the arrow. Distances and other notes should be self-explanatory.
Example Road Book Page
The co driver can either start from scratch (blank pages) or use prepared pace notes provided for a fee by the organizer. At the start of each competitive section (special stage) the pace noting begins. The driver follows the road and tells the co driver how he would like the road to be described back to him one feature (such as a bend) at a time. If the crew are using prepared notes, the co driver reads back the notes so the driver can add his input or make corrections. At the end of the stage, the crew may or may not be allowed to turn around and return to the stage start allowing for a "second pass" along the stage to read back and check the notes.
Most rally drivers use a simple number system to describe bends (although there is no standard for this, and some crews prefer to use their own system). The most common system uses numbers 1 to 7 where 1 is a tight hairpin bend, and 7 is a flat out slight bend. The way each bend relates to the next bend is particularly important, so words such as "into", "and", " continues", "opens" or "tightens" are used.
L7+ R3 Cont &> R4/C into ! Turn L3 200 to Finish
This reads as ".. left seven plus... right three continues and tightens... right four over crest into caution turn left three....200 (yards) to Finish"
See if you can figure out these notes....
Example Page of Supplied Pace Notes