I added a little block on my spreader to hoist a burgee. I thought about getting the kit shown above, but the cleat is metal, and someone pointed out that I should probably avoid that to eliminate the chance of corrosion from dissimilar metals. That seemed resonable, and the plastic one has worked just fine. I connect the burgee to the line with nylon sister clips, which make the flag easy to take on and off.
I have some pics here: Maintenance Results | Sailing Fortuitous
I also have those clips that SchockT linked to for my ensign, which I just clip onto the backstay.
In general, the ensign goes on the stern. A courtesy flag, burgee, or club rank flag go on the starboard spreader, in that order from top to bottom. The Power Squadron has a pretty detailed writeup on flag etiquette:
Flag and Etiquette Committee