The hlds updater tool can be downloaded here:
http://storefront.steampowered.com/download/hldsupdatetool.exe

Download and install hldsupdatetool.exe with the default settings. This article assumes you have chosen to install it to c:\srcds. If you have chosen a different directory make sure to keep it handy because you will need it throughout the guide.

Preparation

If you are running Windows Vista with User Account Control, right click c:/srcds/hldsupdatetool.exe and choose properties. Click the compatibility tab and check "Run this program as administrator". If it is greyed out then you already have UAC disabled and can safely skip to the next step.

Installation

Now that hlds is at its latest version you will install the server files for Garry's Mod.

Click start and choose run.

Enter "cmd" and press OK. Type in the command "cd c:\srcds"
You will now see a window similar to this:

The command prompt is where you will give commands to the updater, which will be used to download the server files. Before you do that, let's go over some of the commands you are going to use.

HldsUpdateTool.exe -command update -game garrysmod -dir games

HldsUpdateTool.exe is the program that downloads the server files for Source based games. Running this without any commands will make it update itself to the latest version.
-command is a parameter that allows you to issue commands to the tool via arguments such as "update"
The parameter -game is used to choose which server software you want to run. You are using the argument "garrysmod" but "cstrike" can be used if you want to download the files for a Counterstrike Source server.
The parameter -dir selects the directory that the files will be downloaded to.

Create a folder "games" at c:\srcds\ and issue the command above to the command prompt. The server files will start downloading to c:\srcds\games\orangebox\garrysmod. This amount of time this process takes will depend on the speed of your internet connection. Be patient as there are about 2.5 Gigabytes of files to download.

Before you run the server you must make sure people can connect to it. Follow the guide that pertains to your router model and forward the required ports:
http://portforward.com/english....dex.htm

This guide only covers Counter-Strike, but the ports for CS and Gmod are the same.

Configuration

There are hundreds of settings that can be used to fine tune your server. Some people want a build-only server. Others may want a deathmatch server. Server convars are used to configure certain aspects of your server such as the default gamemode, name of the server, or whether players take damage. This is all done through the magic that is config files. Configuration files, or cfgs for short, are text files that can be used to run multiple commands at once.

The garrysmod config files are stored in the cfg folder, located at "c:\srcds\games\orangebox\garrysmod\cfg". The autoexec.cfg is a configuration file that is automatically loaded when you start the server. This is where you will be putting the convars.
Here is a sample autoexec.cfg: autoexec.cfg Place it in the cfg folder.

The next time you run the server the convars you set in autoexec.cfg will be applied.

Running the server

Once that is complete, open c:\srcds\games\orangebox\ and run "srcds.exe". A configuration dialog will open. Any convars you set in autoexec.cfg will be applied instead of what is show here. Any convars you have not manually defined will be set to their default values.

Press "Start Server" to start the server. The server console will appear.

Congratulations, you now have the files required to run your own Source based game server.