Junktown is located south of and between Vault 13 and Shady Sands.
There are two companions you can get in Junktown. There is Tycho, a ranger who spends his time in the bar on the northernmost part of time. Talk to him a few times and ask him to join if you wish. Tycho is proficient in rifles and shotguns.
The second companion is Dogmeat, your run-of-the-mill super-mutant killing attack dog. A townsman is having a problem getting into his house because Dogmeat has taken up residence there. Give Dogmeat some Iguana-on-a-stick to get him out of the house or wear a leather jacket to get him to join you. The leather jacket reminds him of his former master. After he joins you can switch armours and he'll still stay with you. Be aware, though, that you may have a problem when you decide to go to the Mutant Base. Since you cannot give your companions better armour in Fallout (fortunately that problem has been fixed for Fallout 2) you should leave them behind at the Brotherhood of Steel hangout or Vault 13. That is, unless you want to see them get cut up by bullets, lasers and rockets. Unfortunetly, you can't leave Dogmeat behind anywhere.
You can find Killian Darkwater, the mayor of Junktown, in the middle part of town. Talk to him. In the middle of the conversation there will be the assassination attempt on Darkwater. Kill the assassin. The Assassin is carrying a hunting rifle and some ammunition. Continue talking with Killian. He will propose for you to get a confession out of Gizmo, the local Mafia boss. Accept his proposal. Killian will give you a tape recorder and a bug.
From here you have a choice. You can either help Killian or Gizmo. If you choose to help Killian you can use two methods to get the confessions. Either talk directly to Gizmo or plant the bug on Gizmo. If you choose to talk to Gizmo discuss the failed assassination attempt and offer yourself as the man for the job. Then Gizmo will confess that he wants Darkwater's head. Accept his offer and return to Killian. Show him the recording and Killian will reward you with some free equipment. We suggest taking the stimpaks. He will then invite you to the 'Kill Gizmo Soirée'. Accept his offer to participate in Gizmo's execution. He will tell you to go talk to the captain of the guards at the front gate. Go there at talk with him. You will arrive in Gizmo's office where Gizmo and Killian will exchange insults. After that its simply shoot Gizmo and his bodyguard Izo. When you've killed the both of them, do not end combat right away. First search their bodies. Gizmo is carrying the only 9mm pistol and the only set of 9mm bullets in the area. End combat and you will recieve 600xp for dealing with Gizmo.
If you, on the other hand, choose to help Gizmo, talk to Gizmo about the failed assassination as above. Offer yourself as a replacement. Go to Killian's general store and shoot Killian. His guards will get a little annoyed that their boss is dead so will attack you. Kill them as necessary. You will get 600xp for the death of Killian. Go back to Gizmo and talk to him. He will suggest that you leave town Izo will then give you 2000 caps.
In the side room of Killian's general store is a safe. Inside the safe is 2000 caps, a gun guide, a stimpak and a .44 pistol with 8 rounds of JHP ammo. There are a few ways of getting to it.
One way is to sneak past the guards at the front door at night, and pick the lock. Then walk into the store, pick the lock on the other door. Inside the other room, sneak past Killian and pick the safe. Or one may try to pick the door to the other room in the day time without the need to break in through the front door. A third way is to plant some dynamite on the door and wait in a safe place. No one seems to mind when the door blows away. From there just walk in and pick the safe.
The Crash House, located west of Killian's general store, houses some intersesting people. Morcelles is the innkeeper. The Skulz gang is located in the northern room.
Ask Marcelles for room for the night. It should cost $25. She will show you to your room. In your room is a locker for storing your stuff but I recommend the lockers at Vault 13 or the Brotherhood of Steel. Sleep there. In the morning, Marcelles will tell you that some crazed Raider is holding Sinthia hostage. In the room above you this turns out to be true. There are three ways (that I know of) to deal with the raider. Ranked from simplest and least profitable to most complex and profitable.
One, you can simply shoot to kill. When he's lying on the floor in a pool of his own blood, Sinthia will tell you off and you get 400xp.
Two, knock him unconscious, but be sure not to accidentally kill him. I suggest you aim for the leg and don't use anything that will cut him up into little shreds. Sinthia will think you killed him and will start to yell at you. Just tell her he's fine and that he just has some broken bones. She'll calm down and you should get 600xp.
The third way is to talk him out of his hostage-taking insanity. Tell him not to shoot the girl. He'll consider it and the conversation window will close. Be sure not to walk too close to him to continue the conversation or he'll go into a shooting craze. Next tell him you want to help. Say no harm will come to him and that he should release Sinthia. In this way you should be able to negotiate a deal with him that he leaves down and gets between $0-200. For this act of diplomacy you will recieve 1000xp.