How do I make and apply a Normal Map? I'm having problems trying to make a Normal map. Essentially I want the High Res model detail to go on to the Lower Res one. And that's done trough Normal Maps correct?

Here is the blend file:

https://mega.nz/#!EQ11RYgR!kwZ57m9rj-nQx7dTKSlOfLcM_4eOlhTOR1GBoLvCmDQ

I managed to go this far, but the texture doesn't look quite there. It looks pixalated in some places, and the effect ain't showing on the Low Res model either.

What do I need to do?
Ray distance

You should increase your baking ray distance in order to capture the whole highpoly surface. Here's a comparison between different values (0 on the left, 0.1 on the right),



As said in the manual's page, the parameter controls


  [...] how far a point on another object can be away from the point on the active object. Only needed for Selected to Active.


Low margin settings helps us to see how some parts are missing in the image on the left. Once naked correctly dont' forget to set "non color data" and to connect to the vector socket in the shader.



Notice how the wrinkles and other detais are correctly transferred upon the low-poly mesh.