[OuTpaTienT]

I would suggest teaching them using TAB. It really is simple enough that a young child could understand how it works, and it'd make it easy for you. You could easily write out the tablature of some songs you know they are familiar with then just let them practice. Of course you'll have to teach them how to read tab first, but that'll only take ya about 10 - 30 minutes.

As for what to practice, like scales and stuff...don't you have a huge collection of old guitar magazines? I thought we all did. Guitar Player, Guitar World, etc. If you do, go through those and check out the monthly columns. Quite often they are reminding musicians to practice the basics and will have a good lesson on some basic stuff (scales, chords, techniques).