Adam,
Once you have a piece of cane that's about the right spine, just heat the crooked spots and straighten. I think there's an entry in the How-To Resources on straightening. A heat gun ($10 from Harbor Freight) is a good, efficient way of heating the cane, but a candle works too. You don't have to get it very hot - just wear lightwieght gloves so you don't burn your fingers. Straighten the most crooked parts first (usually the nodes) and work your way down to the less crooked parts and before long it'll be straight (or straight enough).
After it's straight, either compress the nodes by heating and rolling between two blocks of hardwood. Or lightly sand the nodes to remove the sharp "bulge". I used to compress the nodes, but cane arrows are so tough that I've found that sanding the nodes - while no doubt weakening the cane somewhat - still makes a cane arrow that never breaks, and it's a whole lot faster.
Next step, cut to length (your drawlength plus an inch) by rolling it under a razor knife (i.e. boxcutter). Then drill out the closest nodes at both ends and plug with 3-4" long sections of dowell rod or large bamboo shishkabob skewers. Titebond II is a good wood glue to use for that. Wet the inside of the end of your piece of cane with glue and a Q-tip first, then wet the dowel and insert.
After the glue is dry, sand tapers on the ends for the point and nock (those pencil sharpener-type taper tools don't work so well with cane). I use a small belt sander for this. If you want to be more primitive, you can cut your own nock into the cane with a hacksaw blade, instead of gluing on a plastic one.
If you want to coat your cane arrow shafts with lacquer or something, you'll need to lightly buff the surface with scotchbrite or sandpaper, or it won't stick. Also, I've had problems getting Fletchtite or Duco to stick to cane, but now I've discovered fletchtape which is great stuff and sticks well to anything!