Choose Preferences from the Teacher menu.

Automatically check for updates
With this option on, Master Key will check for updates no more often than once a day when launched. If a new version of Master Key is found, an option to download is presented. You can also manually check for updates from the Master Key menu. This option is always off when Teacher passwords are on. Manually checking for updates from the Master Key menu is password protected when the Teacher password is on.
Remember last logged-in pupil
This feature is most useful in multiple user environments. With this option checked Master Key records the last logged-in Pupil in the current user's preference folder. When the user opens Master Key from then on, his pupil file is loaded. Master Key will not ask for a password, even if Pupil Passwords is turned on since the user has accessed this pupil file before. If the user logs-out the pupil, the user will be asked for a password for any other pupil file if Pupil Passwords is turned on.
Choose pupil at startup and logoff
With this option selected, when Master Key is launched or when a pupil logs-off, the user is immediately asked to select his/her class and name except if the Remember Last Logged-in Pupil option is on and there was a pupil to remember.
Enable Account Mode
With this option on, Master Key pupils are always associated with the one user of the current computer Account. For more information, see 10. Multiple-users/Networks
Hide "Master Key Network" folder
Only available when Master Key is used in Network mode and only used on the Mac, when this option is checked the Master Key Network folder is made invisible. This is used to hamper casual deletion of Master Key files on the server by users.
Use double-spaces between sentences
The rules for spacing between sentences may be different depending on who you are working for. Many computer programs automatically adjust the spacing between sentences for you. You have the option depending on which you think you should learn. If you include your own text files as drills, and want this option to work, you will create your text files with double-spaces between sentences.

Require Master in order to advance to next progressive drill
With this option on, the pupil must master one drill before proceeding to the next. It is enforced on any progressive unit. More accurately, it looks for a leading number in the Unit folder name and looks to make sure "generator" is not in the name of the unit folder. You could therefore make your own progressive units by using a leading number in the unit folder name.
Use double-spaces between sentences
This option is provided for those who want the anachronistic rules of the typewriter. Generally it's advisable to leave this off. Master Key attempts to remove extra spaces from those files that have them with this off and add them when they are not present when this option is on, regardless of what the actual text file contains in spacing.
Allow backspace
This option allows the delete key to be used to correct mistakes.
With it on, Accuracy is the final result of what you typed and 98% accuracy is required for mastery while an error rate, which is what was typed incorrectly regardless of corrections, must be 5% or less for mastery.
With it off, Accuracy and Error Rate become the same so that 98% must be typed correctly in order to achieve mastery.
Other rules
Most of the rest of these rules are intended for a teacher that wishes to control the abilities for students. To enforce these rules, the teacher would turn on passwords for teacher on the next tab.
Enable User-level options
This feature is particularly useful in multiple-user environments. With this option on, pupils are granted access to a subset of preferences that they would not be able to access if the Teacher password is enabled. As the name implies, these user options are not global nor are they assigned to the pupil but rather they are preferences stored in the default preferences folder of the account for the respective OS. In a multiple-user's environment, this would be the user's own preferences folder. On Mac OS X, in ~/username/Library/Preferences/Master Key User Options. On Windows in username\Documents and Settings\Application Data\Master Key User Options
Users are granted all of the options on the display and sound tabs.
The default user options are determined by the corresponding preferences set in the preferences window so that new users inherit these preferences.

You may turn the passwords requirement for the Teacher and Pupils on and off individually in the Preferences. This is also the only place to set and changed the Teacher password. For more on passwords see 4. Passwords

This tab is also available to users when access to preferences is password protected and Enable User Options is on on the Rules tab. Except for the Font Size, you can change any of these during a drill.
The Key Layout changes the display layout in the animation. On the Mac, it will also change the actual layout but you must have that key layout checked so it's available to switch to. You can find key layouts in System Preferences:International:Input Menu. In Windows you can set the keyboard layout on a per-application basis and Master Key will also adjust its display to most common layouts. You can find the key layouts for Windows in Control Panel:Regional and Language Options:Languages:Text Services and Input Languages:Details
The progressive drills are written
primarily for U.S., Dvorak, Colemak, French, and German. Dvorak
is purported
by many to be a more efficient layout of keys for the English
language. On the Mac, the nicer Dvorak layout is the one that retains
the command keys to the QWERTY positions. Colemak purports to be even more
efficient but must be installed separately since it is not included
with Mac or Windows.
Font Size
12 and 24 point type. 24 might be more useful for younger typists or larger screens. This is the only option that can't be changed during a drill.
Show keyboard animation and show hand outlines
The key animation shows which key is next to be typed in white and which was last typed darkened. Hand outlines give a general idea for hand position on the keyboard. Animation may be too demanding on slower Power Macs and earlier Macs to type much faster than 20 words per minute and should be turned off for faster speeds. On G3 Macs, the animation will be fast enough for the fastest typist.
Show finger position chart
With this option on turns the color-coded key position chart on and off.
Show WPM heads-up display
This option will underlay your words per minute underneath the text your are speaking much like a watermark on paper. This allows you to read your speed without taking your eyes off the text you're typing.
Hide other applications
With the Hide Other Applications option checked, Master Key will draw a solid color for the entire background outside of the Master Key windows. The color can be selected using the Color... button
On the Sounds tab:

This tab is also available to users when access to preferences is password protected and Enable User Options is on on the Rules tab.
For Key Sounds, you may choose Standard or Subtle for a pleasant audible feedback or you may choose from one of the typewriters. The typewriters sounds are sampled from actual typewriters and include many more sounds such as the shift key and paper insertion. The typewriter sounds are mostly for fun. The Typo Sound is the sound made when you make an error and includes the sound of a small Burmese cat named Sasha.
There are also sound and volume settings for ParaTyper although the relative music volume adjustment is only available on the Mac.

You can set your own speed goals for those drills which do not contain a speed goal, otherwise this cannot be changed.
You can set a timed-drill for 1 - 10 minutes. If the time exceeds the time to finish the drill, the drill text will rotated until the time is run out.
The Introduction checkbox allows you to see three screens on posture, finger position and basics about how to use the drill window.
In the Drill Window:

Here you can choose to show or hide the keyboard display and set a metronome to help with rhythm. Although not a perfect metronome, it may help to use this to establish a rhythm. The numbers represent the approximate words per minute beat. You may find that putting this about 10 WPM above your speed goal may be well enough to make up for missed beats and errors you make make while still allowing you to accomplish your speed goal.