Pucker the lips like you are whistling or blowing out a match.  Focus the corners inward like closing a draw-string bag. The lips should be fairly relaxed, not tight.  Drop the lower jaw and form an overbite.  Put about 3/4ths of the reed in the mouth. The upper lip should be up close to the bark, and the lower lip about half way between the tip and the bark.  This position may change as you change registers.

Breathe in an oval to aid in correct embouchure formation.  Say "Ho;" then breathe in, keeping the lips in same shape.

Common embouchure faults:
1. Biting
2. Under bite or even jaws
3. Rolling lips in over the teeth with little or no red showing
4. Smiling
5. Excessive tension in the lips/chin muscles
6. Puffing the cheeks and/or air pockets between the lips and the teeth
7. Too little reed in mouth

In order to produce the best sound and achieve maximum volume, the reed must be able to vibrate as freely as possible.  The more pressure you place on the reed, the more you dampen the vibrations.  Many embouchure problems result from using a reed that is too hard.  I recommend soft to medium soft for beginning bassoonists and medium soft to medium for advanced players.