This bike has the old "threaded" style headset.
Here are Sheldon Brown's details about how those work.
Check that site to see how to disassemble other styles of headset.
For this one, first step is to loosen the "Quill bolt" that goes down into the stem.
This one was concealed under a rubber plug that we had to pull off.
This bolt uses a big allen wrench. Give it a few turns til it's loose and then read the next step.