When people show up for your casting call, it is best to have a small table set up outside the room where you are holding your auditions. Have someone (preferably a nice girl you know) at the table to make sure the person fills out a form with their name, contact information, and a little about themselves. Make sure you have "sides" or the script available for the person to look over, and also offer them some snacks and at least a cup of water. Also, have some signs posted to your casting call if it's not immediately obvious where they are supposed to go.
Have some chairs setup and a camera facing an open area where they can stand and act. I find it a good idea to see if they have any questions about the story or the characters. Then have them run the scene. You read the other parts. Don't worry about acting well, you need to see how well they act on their own. After each attempt give them direction and correction for what you'd like to see them try.
Pay attention to how well they adjust to your requests and directing. Make sure your video camera is running when they are acting so you can review the footage again later if you need help in deciding who should get what parts.
It has only been in the recent past that I have begun to be able to see the difference between good and bad acting. That being the case, I don't think I'm at a point where I can give tips on what makes actors good or bad, believable or forced. The best advice I can give at this point in time would be to watch a good film with fantastic actors in it before you cast.
Good acting is believable. Great acting is subtle. While theater trained actors will often be "over the top" to reach the person in the back of the auditorium with their performance, movies get right up close to the person. It's the eye flicks and slight lip spasms that distinguish fantastic acting from the rest of the world in film.
But in the end, as with everything here at Production-Now.com: Use what you have. If you wait for Guy Pearce, Denzel Washington, or Grace Kelly to show up, you'll never shoot your movie. Work with what you have and you may be surprised with what you can do.
Your Media Production Mentor