I just got a Fender Starcaster and was wondering how I install the whammy bar. I have a bar, spring and 2 allen wrenches in a bag but I don't know what to do with them. I see the hole that the bar screws into, but I don't want to proceed without help.

Welcome to the forum. Just insert the spring into the hole and screw your bar in. When you remove your bar for storage put a piece of tape over hole so you won't loose the spring or take spring out and keep in a safe place. Simple. The allen wrenches are for making adjustments that you are not ready to do yourself yet. Just hold on to them for use later.

Or you can do what I did and lose the spring/smash it into the hole. I have no idea where that thing got to on my MIM Standard. Now my bar just flops around or locks rock hard into place, no in between. How is a properly set up bar supposed to look and move? What is that spring for?

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Proud Fender addict! Still looking for perfect amp!
Classic Player 60's, Standard Strat, Highway One Texas Tele, '57 Twin-Amp, '63 Reverb, Blues Deluxe w/ ext cab, Champion 600