QUESTION:
How do you navigate in space? 

ANSWER from Smart Filter on August 7, 1997.
The following information is quoted from the Shuttle Reference Manual
at the following URL:

http://shuttle.nasa.gov/rererence/shutref/orbiter/avionics/gnc

From this webpage there are links to a wealth of extensive and specific
information concerning Guidance, Navigation and Control.  The available
information is far too extensive to quote here. I am including only a
small portion of the overview data in the shuttle GNC portion of the reference
manual.
For more detailed information concerning the avionics used for 
navigation, please see the above website.
 
Shuttle Reference Manual
Guidance, Navigation and Control
Overview 

Guidance, navigation and control software command the GN&C system to effect 
vehicle control and to provide the sensor and controller data needed to 
compute these commands. The process involves three steps: guidance equipment 
and software first compute the orbiter location required to satisfy mission
requirements, navigation then tracks the vehicle's actual location, and flight
control then transports the orbiter to the required location. 

A redundant set of four orbiter general-purpose computers forms the primary
avionics software
system; a fifth GPC is used as the backup flight system. 

The GPCs interface with the various systems through the orbiter's flight forward
and flight aft multiplexers/demultiplexers. The data buses serve as a
conduit for 
signals going to and from the various sensors that provide velocity and
attitude 
information as well as for signals traveling to and from the orbiter propulsion 
systems, orbiter aerodynamic control surfaces, and displays and controls. 

The GN&C system consists of two operational modes: auto and manual 
(control stick steering). In the automatic mode, the primary avionics software
system essentially allows the GPCs to fly the vehicle; the flight crew simply
selects the various operational sequences. The flight crew may control the
vehicle in the control stick steering mode using hand controls, such as the
rotational hand controller, translational hand controller, speed brake/thrust 
controller and rudder pedals. The translational hand controller is available
only for the commander, but both the commander and pilot have a rotational 
hand controller. 

In the control stick steering mode, flight crew commands must still pass through
and be issued by the GPCs. There are no direct mechanical links between the
flight
crew and the orbiter's various propulsion systems or aerodynamic surfaces;
the orbiter
is an entirely digitally controlled, fly-by-wire vehicle. 

During launch and ascent, most of the GN&C commands are directed to gimbal
the three space
shuttle main engines and solid rocket boosters to maintain thrust vector
control through the
vehicle's center of gravity at a time when the amount of consumables is
changing rapidly. In
addition, the GN&C controls SSME throttling for maximum aerodynamic loading
of the vehicle
during ascent-referred to as max q-and to maintain an acceleration of no
greater than 3 g's
during the ascent phase. To circularize the orbit and perform on-orbit and
deorbit maneuvers,
the GN&C commands the orbital maneuvering system engines. At external tank
separation, on
orbit and during portions of entry, GN&C controls commands to the reaction
control system. In
atmospheric flight, GN&C controls the orbiter aerodynamic flight control
surfaces. 

Functions of GN&C software include flight control, guidance, navigation,
hardware data
processing and flight crew display. Specific function tasks and their
associated GN&C
hardware vary with each mission phase...