These are usually easy to find around Christmas time. Dollar stores and grocery stores usually stock them for about $3 apiece. I highly suggest not using the older incandescent types as they only run about 10 hours on two C batteries. The LEDs also dont srtick out as far and the wiring is more forgiving.
Step 1: Glue the Top Lid Together
DO NOT TAPE THE LID DOWN!
This entire project you will be working from the bottom so it is important to start with a solid lid. Because of drilling, make sure you hot glue the top lid FIRMLY together. You will thank yourself later when you are drilling the holes. Make sure the lid is double thickness everywhere. I cut filler strips for the top and bottom to fill in as needed. Having the cardboard doubled up helps support the lights from being pressed sideways and slipping out.
Throughout this project, I used lots of glue. Its cheap and holds really well.
Step 2: Wrap It Up...mostly.
Wrap the present with several layers. Use lots of tape on the sides to keep it tight. Without taping, fold the paper temporarily on the BOTTOM (i.e. the side you will leave open to insert the lights in the lid) so you can work on the top.
On the top, use tape and hot glue to tightly and firmly attach the paper to the cardboard each time you fold it down. You dont want the paper popping up when you push the lights through later. Once the top is complete flip the box upside down. Unwrap the paper and fold open the bottom lide. With a scissors trim the paper just slightly higher than the folded open lid to make it easier to reach inside while placing the lids.
Step 3: Start the Lights and Mark the Spots
Since this is a demo, I used three strings of 15 lights each; two color and one white.
Leave them on and solid the whole time so you can spot a bad string while you work with them. Using a magic marker, place a dot everywhere you plan to put a light. This is very important as each hole must be within reach of the last one. If you space your holes out too much the lights wont reach and you will have a bunch of extra holes. Measure the length between the lights first and mark your holes accordingly.
Also, keep in mind if you want this to be reusable you wil be gluing the battery pack in a corner so it can be easily accessed to turn the lights on/off and to replace the batteries.
Once you are sure you are happy with your planning go ahead and drill your holes. To find the right drill size i just drilled a bunch of test holes through TWO glued pieces of cardboard. Then tested the fit. You want a mildly sug fit...long enough to hold it in place until you can glue it in place.
Step 4: Start Installing the Lights
Glue the battery pack in the corner. Make sure you don't glue the side that has the lid that pops off.
I pushed all the lights from the first string through. Once I was happy with the depth I hot glued them in place from the inside.
Step 5: Add the Rest of the Lights
Again, I got fancy for the website but you can do as much/little as you want. I planned ahead not putting lights in one corner to have space to mount the packs close together as well as space for the corner support (later). I also spaced them apart enough that I can easily pop the battery covers off to replace the batteries. This makes the box infinitely useable.
Install the rest of the lights BEFORE you glue them in. This ensures you can reach all the holes before you glue them in place and then realized you cant reach a hole.
Step 6: Optinal: Add a Protective Shelf
The first one I made, my neice shook the bok and a couple lights got pushed thouh by the candy I had in it. Every subsequent box I've fashioned a simple protective "plate" to keep the box contents from pressing against the lights.
I used a tape measure and an extra box to bend it up. I used a thick ruler as a straight edge to help me bend the edges up uniformly and neatly. This is also why I only put lights within the top one inch of the sides. You should make it slightly smaller so you don't end up with such a tight fit you have to remake it. Copious amounts of glue on the flaps hold it into place solid as a rock.
I cut out the corner by the battery packs for easy access. I fashioned a little support bracket to support the "floating" corner.
Step 7: Voila!
Add present, tape the bottom shut, and finish the wrapping paper.
Hint: If you gently tape it shut, it can be reopened without damaging the wrappig paper. It can be a pain to rewrap these boxes. I ran out of bows but normally I put a big one in the middle with a couple lights hidden within the bow. I think you get the idea.
I posted a short video of the lights with the flashers turned on.