I remove all of the hinge hardware before painting. I don't tape off the top of the box because I find it easier to just chisel any  paint accidents off once completed. I am using Old Fashion brand milk paint in the salem red color. The first coat always looks horrible. I applied the paint with a foam brush and would highly recommend doing the same. It doesn't level well like latex paint and brush marks are hard to get out. I did a total of 3 coats

After the 3rd coat dried, I applied some boiled linseed oil to deepen the color a bit and for some added protection. Rather than wiping it on, I've found the best method is also a foam brush. I apply boiled linseed oil to the whole box until it stays wet for about 5 minutes - touching up any dry spots. After that I let it sit for 20 minutes or so and wipe off the excess with a rag lightly coated with more boiled linseed oil. 
I did 2 applications followed by some paste wax

While giving the BLO some time to cure, I started milling up some cherry for the trays

These are simple dovetailed boxes designed to fit inside the box. 

I didn't want to add any pulls to the trays, and I needed a snug fit. In order to accomplish this I decided to make a 1/2" thick molding. The molding will fit tightly inside the box, but I will have 1/2" of space on all 4 sides to get my hands in there to lift out the trays.
I don't have any molding planes but I wanted a cove profile, so I used my router table. I left the pieces wide so I could safely route each edge and then cut it in half after. 

Before assembling the tray, I like to finish the inside faces. It's really difficult to do this after assembly. I taped off areas that receive glue and padded on some clear shellac

Now with the tray fully assembled, I pore filled it by sanding in some boiled linseed oil to make a slurry - being careful not to contaminate the cherry with the darker walnut slurry (separate rags and sandpaper). The finial finish will be amber shellac. Not only does it give both species a nice color enhancement and gentle sheen, but is blocks any odors from the off-gassing BLO. Important since this will be inside the box

Now for the dividers. I captured a lot of steps here because it details making dados with handtools. Like with the molding, this piece is wide because it will be ripped in half after. This ensures my dados will line up. 
After fitting the piece to the inside of the tray, I mark the location with a knife

I transfer that mark around both edges and set the depth of the dado with a marking gauge. This makes it so I can mark only inside the lines and not have any gauge marks to remove after 

Then I chisel out a "V" on each inside edge of each dado. 

Some people like to chisel to depth, I prefer to saw. For me the best way to get a straight line to an even depth is with a saw. I am going to do this at my bench hook with a cross cut carcass saw

First I start with the toe. I make sure I stay on both lines - the one across the face of the board, and the one going down the edge. This ensures my cut stays straight and plumb. I don't saw all the way to the final depth yet

Now I do the same with the heel. Once I have a kerf on both ends, I connect them buy sawing straight across until I get to my gauge lines 

Here are all the edges of the dados sawn to depth and perfectly straight and plumb

Next I remove a little waste. Some people go right for the router plane here, but on narrow dados that are sawn on both sides, I find a quick whack with a chisel breaks out almost everything very quickly

Now with the bluk of the waste removed, I move to the router plane. Since this piece is thin and the dados are shallow, I had to rig up a way to hold it in place. This worked well

I work in from both faces with the router plane until I am at an even depth 

Now with all the dados cleaned up. I mark the piece to be ripped, and mark the orientation on each side so the dados will match up 

Then it gets ripped in half 

I match plane it with my smoother to remove the saw marks and get them to an even height 

I place them in the case without glue so I can fit the dividers 

I cut one piece to rough length and then take it to the shooting board until it has the fit I want. I want to keep the middle dividers removable so I want the fit to be a little on the loose side. 

After testing and getting a snug but removable fit, I take one more swipe on each edge on the shooting board. This will account for any thickness finish will add and will make sure these don't get too snug when the humidity rises again

Once I have one made, I use it as a reference to make the others. I leave it a little long so I can sneak up on the perfect fit

I like to reduce visual bulkiness whenever I can. I cut a curve in the dividers. Since getting the curve dead center on all of them is difficult, I started the curve further from the edge on one side than the other. This will make it easy to put them all in the same way and they will look almost identical. I also chamfered the edges of the dividers that have the dados. This doesn't make them look as heavy or thick

The finished Schoolbox in it's final resting space. I use it to store some of my pocket knives 

I made a simple tassel for the key so I don't loose it 

The two trays fit nicely inside 

The bottom tray is a bit narrower than the top to accommodate for the the small tray shelves. I lined the trays and the bottom of the box with corduroy 

Here you can see the gap the molding provides to remove the trays without any pulls 

Yes, the lid keeper is a friendship bracelet. It was a fun little side project I did with my daughters - and it looks pretty cool here too

Thanks to all who Participated!!