Here are some videos to help you build and understand the Space Derby race.
Start by sanding the inside cavity/channel where the rubber bands will rub before gluing the two sides together. Enlarging this channel by sanding somewhat is helpful as well to prevent rubber bands rubbing on the wood. You want this area and the outside to be smooth.
Choosing a Method
The videos and instructions state two different ways of installing the Rocket Hanger: between the sides or cut into the side. Choose which method you think is best. I recommend putting the Rocket Hanger between the sides by cutting a notch in the wood and fitting the Hanger in place before gluing the two rocket halves together to ensure the best fit. Installing the Hanger in the side of the body encourages you to forcing the parts together which will likely damage the body. Glue the Rocket Hanger and the two rocket body halves together ensuring that the front and rear halves are aligned with each other (small hold and large holes match) and let everything dry for a few hours.
Shaping the Space Derby Rocket
Shape the body of the rocket using sand paper and/or a potato peeler to remove much of the corners quickly. The directions state that knifes should not be used and I agree. Knives can severely damage the soft balsa wood if not careful. I recommend installing the nose cone (no glue) and letting your Scout use a potato peeler to strip away at the edgy corners of the block to make a round tubular rocket body that tapers to a point at the front down to the nose cone. A little taper at the rear is fine as well, just be sure to leave enough material at the back for the rubber band dowel notch (see YouTube videos). The lighter and more aerodynamic the body the better it will fly. If the rocket at all resembles a square tube, remove more wood until it is round.
Design a theme or paint scheme for your rocket. The Scout Shop has sticker kits for Space Derby rockets or they can be purchased at scoutstuff.org. Place masking/painters tape on the Rocket Hanger to avoid painting it. Paint on the Rocket Hanger will cause it to stick in the Rocket Carrier after launch. Sand the outside of the body very smooth and apply a couple coats of paint, but not more than three. Paint will add extra weight. Remove the tape once paint is completely dry.
I would not recommend using super glue except for items like perhaps the wings. You will want the forgiveness of Elmer’s glue when putting the rocket together in case a mistake is made; it can be fixed before the glue sets.
Use care when handling the rubber bands. If they contact sharp or abrasive objects, they can get scratched and will break more easily. If testing your rocket with the rubber bands installed, be sure to gradually warm them up according to the instructions included with the kit. They will last longer this way.
If the wings extend back past the end of the rocket, it will not meet the length specifications in the rules so keep that in mind.