Immigration:
The first building on the left hand side is the Immigration/Custom office. At the Immigration office go up to the counter and get the entry form. Fill that out, careful to fill out all the information. They will ask you for a hotel address with telephone number in India. Make something up, or have this information handy.
Hand in the entry form and the passport and they will stamp your passport.
Now you can move down to Customs.

Customs:
Bring a lot of patience. This will take a while! They will want to see your passport, your vehicle registration paper and your carnet. Also you have to be able to show them the chassis number and the engine number on your vehicle since they will check this against the information in your carnet.
The officers speak very good English, so they will guide you through the process. Which means I will not go into the details here. Just know this: it takes a while! Stay friendly and calm and politely answer all their questions and you will not have any problems.

Immigration:
The border crossing is pretty much in the middle of the city, so it can be pretty hectic. As you drive towards the border the immigration is in a building right on the side of the road, on the right hand side. Someone will come forward and tell you where to go. The customs officials are sitting practically in the road, and with all the traffic the noise is incredible, not to mention the dust and smog. Anyway the procedure is painless, they give you and exit form, you fill it in. They check your passport and stamp it out, and you are done. It takes 5 minutes. The main problem is that there is nowhere to park, which is why there is a traffic jam. With a bike you can usually pull out across the street.

Customs:

The customs post is on the left hand side around 20 meters further down from the Immigration post. Just walk in waving your carnet, and the someone will direct you to the correct guy. He will have a quick look at your vehicle, and then fill in his book, stamp your carnet, call his boss, offer you a tea, and ask you a lot of questions about your trip and the bike. Everyone will have a look at your bike and then send you on your way. A 10 to 15 minute procedure if the carnet guy isn't on break. The only unpleasantness came when one guy started asking about how much money I had, I just dodged the question and told them I had no cash, only credit/atm cards. This satisfied them and I was sent on my way without any further "unpleasantness".

One thing that might interest some people, there is no customs formalities for Indian registered bikes (or bikes registered in SAARC countries).

Getting visa for India:
We got our visa for India in Islamabad, Pakistan.
The Indian Embassy is in the Diplomatic Compound in Islamabad. This means that you can't just walk up to it, but you have to get on the official bus. The bus-stand is down from the compound, across a bridge. You will not be allowed to take anything into the Diplomatic Compound, so leave your bags and your mobile at the hotel/campground or check it in at the security station at the bus stand.
Once you get to the Indian embassy ask one of  the guards for the visa forms. You can then fill these out while you are waiting in line. You have to fill out two identical forms, so you will need two passport pictures. Also bring some glue for sticking the pictures onto the form, otherwise you might run into problems.
You then hand in the forms and your passport and you will be told to come back in seven days. There is no express service. You will have to wait seven days.
When picking up the visas check them. We have heard from a lot of travelers who only got issued 3 months single entry visas even though they had asked for 6 months multiple entry visa. We did not have this problem. Should you run into this problem complain and keep insisting until they change it. That seems to have worked for all the people we spoke to.

Changing money:
Changing money on the Wagah border is not a problem. The officials on the Pakistani side will pester you about changing money with them. However there is an official notice posted stating that this is illegal.
On the Indian side there is a bank and a tourist information office.

Leaving India, it is easiest just across the border in Nepal, where there are plenty of change booths.