From: Stephen Hemingway
For my money, the easiest way is to add the US International Keyboard (control panel->regional and language settings->keyboards->add a keyboard->scroll down to US keyboards->choose US International. More details at http://support.microsoft.com/kb/306560.
You can setup a hot key combo to switch between US and US International keyboards in the 3rd tab on that page. You also get a 'language bar' that you can manipulate with a mouse to choose keyboards.
The keyboard is pretty easy to use. For umlauts you just hit " (double quote mark), which is a 'dead key'. If you follow it with a letter like 'e' you get the umlaut. Any key that gives a base letter that doesn't take an umlaut (consonants and punctuation) just give you the bare quote.
I am not in the US, but in the UK where a horrible broken keyboard is in general use which allows us to type $ and [pound] without having to use strange shift chords. I always try to make sure I get a proper US keyboard as then I can use US International as an alt keyboard which gives access to virtually all the accented characters I could wish for.