Awarding Experience Points
A character gains experience points by adventuring and interacting with the world. They can then spend these points to advance the skills of their character.
You, as an ST, will develop your own methods of awarding experience points, but if you do it based on a character's level of interaction, it will make role-playing a lot more fun for everyone. Think of it this way -- if a person walks through life always sticking to the same routine and never trying anything new or going out on a limb, they won't do much in the realm of personal growth. However, if a person is talking to new people, seeking out new experiences, and trying to learn new skills, they're going to grow quite a bit.
You should award experience points privately to each of the characters you're ST-ing, and encourage them not to disclose the amounts awarded to each other. When you're awarding, base your decision on the amount of role-playing done and the level of interaction of your characters.
Usually you'll be playing in a session -- a certain amount of time you've all devoted to playing. Tell all the players beforehand that they can expect a general amount of experience points when the session is over -- if you're going to be role-playing for four hours, a rough estimate might be 1000 experience points. But base it on the time that passes in Carador instead of the time that passes in 'real life'. Then keep your awarding of experience fairly close to your estimate. If a character didn't do anything, but just 'came along for the ride', give them, say, 700. If a character did a lot to move the role-playing session and solved puzzles or did a lot of interacting, give them something more like 1400. Then, after the session is over and you've awarded experience, allow them to spend any points they'd like -- or save the spending until you begin your next session.
The Experience Point System is an artificial one, and if you like, you can adopt a more organic approach. It's called the Natural Growth System. Dispense with experience points altogether and make the characters seek out training or learning during role-playing time. For instance, if a character wants to learn 'Pick Pocket' off the Special Skills chart, they would have to seek out a thief and learn from them. Libraries, too, can be indispensable learning tools. If you're going to take this approach, make sure you read "Real Time vs. Glossed Time".
This approach is more realistic, and can add to adventure as characters seek out teachers, spellbooks, or direct experience in their chosen fields.
You'll have to pay more attention as an ST. If a character has gotten in a lot of fights during a session, you might award them a Damage Point or two. If they've been riding horses, you might up their Riding Ability a percentage point or two. Remember to make growth slow, but do pay attention to what a character does and raise their abilities in those areas.