Replacing old house replacement windows is not an easy task especially if you are not a DIY expert like many people I know. However, I will not say that replacing windows in an old house is a strictly a difficult job. I essence it will not take you more than 2 hours to fit in for and average sized window. I terms of costs you should be ready to part with $ 500- $ 550 for a high performance wood insert one.
The first step is to take measurements of the window required, carefully determine the sill angels and window perimeters. The next step is taking out the old sash from the jamb liners, then take the jamb liners out too with a flat bar. Now make sure the frame is free of any debris and is smooth and painted to support the replacement window. If you have sash weights in place, this might be a good opportunity to take them out and insulate, for better heating and cooling. Use fiberglass or polyurethane for insulation, though personally I like polyurethane a better insulator.
Now, while you are proceeding with your old house replacement windows apply Caulk around the openings and tip in the new window. Make sure to use just 2 screws to gently lock the window in, and level it to see if it fits your requirements. Now use shims to adjust the window, once adjusted, use nails to screw it down every 4-6 inches around the perimeter.
Finally, the last step is to fill in the blanks around the perimeter that you left during installation with caulk and use any stuffing if it's wider than 0.25 inches or so, you can use expanding foam for stuffing too, now paint the windows accordingly or leave it to weather if it's a cedar window, and enjoy a newer outlook.