I think the best way to type in Pāli is to just use dead keys. It's very easy to use. You press a modifier key (like Right-ALT) plus one of the symbols, release both, and then press one of the letters. This causes the special Pāli character to appear. Just google on how to create a keyboard layout to do this (for Linux, etc). I used Microsoft's Keyboard Layout Creator
... this works for Windows XP and up.
Bhante Pesala (the link shared by Bhante Yuttadhammo above) has a couple layouts that are already ready-made. They have way more letters than is necessary for Pāli (but still nice if you need those options). They don't seem to work with the keyboards where the tilde is above the grave character (instead of above #, which is already above the number 3)... so you can't do the ñ or Ñ if you have that kind of keyboard. So, I ended up making my own.
In the MS's Keyboard Creator, I just loaded in the default US keyboard layout, and then for the ALT+CTRL keys, I turned the `
, and .
into dead keys. With the ALT+CTRL keys set up like this, you can just use the right-ALT... the CTRL is not needed (a nice bonus).
I originally tried to set it for the solitary-CTRL keys, and found that it doesn't work for some programs, like Opera, and MS Word 2003 for some reason. ALT+CTRL (or Right-ALT) definitely works, in everything that I've tried it, including notepad.
The following is the way I have it set up:ALT-CTRL + .
t d n l m = ṭ ḍ ṇ ḷ ṃ
T D N L M = Ṭ Ḍ Ṇ Ḷ ṂALT-CTRL + -
a i u = ā ī ū
A I U = Ā Ī ŪALT-CTRL + `
n N = ñ ÑALT-CTRL + '
n N = ṅ Ṅ
David mentioned Unicode. It's just a standard for the mapping of characters. You definitely prefer the fonts to be mapped in that for consistency's sake (or else it might come out wrong, depending on what mapping you use). Many of the unicode fonts support macrons and the letter Ñ, but unfortunately many of them (the fonts) don't have the dotted characters. In the unicode map, the macrons are in the "Latin-1 Supplement" block, and the dot letters are in the "Latin Extended Additional" block.
BabelMap is a good program to see what characters are available, or to find out what letter is where if the mapping is odd, or even just copy-and-pasting these special characters. Windows XP (and up) has "Arial Unicode MS" which is the only (included) font that has all of the letters. It's great for on-screen reading, but not ideal for printing... so get another font for that. Bhante Pesala has some, I recommend "Pali" for printing.
By the way, many online sites still don't use unicode fonts for the Pāli, so you need to download their own fonts, which might appear awful on your screen. :\