Mount the STK504 on the STK500
Place the AVR with the programmed demo application in the ZIF socket
Connect the LCD cable
Make sure the VTARGET jumper on STK500 is mounted
Set the switch on STK504 to the LF position
Turn on power on STK500
The demo application should now run, flashing some of the LCD segments and displaying some text.
The source code and hex file for the demo can be downloaded from the Atmel web site.