Use a fine grit sandpaper (180 to 220) to smooth out any rough edges. If you marked low areas with a pencil, you can blend them into the high areas to ensure that the next coat will bond fluidly to the surface. This time, work in a horizontal direction, perpendicular to the first coat. Allow to dry. Sand once more, and run your hands over the surface to feel out imperfections that you can't see with the naked eye. With each new coat, switch direction from horizontal to vertical to ensure even coverage of the drywall. Make sure that you allow each coat ample time to dry before you apply the next coat. Vacuum the walls and make sure that there is no remaining plaster dust. Apply a primer before painting or hanging wallpaper.
Sand the walls. Apply a second layer of drywall mud. Repeat as necessary until the surface is smooth. Clean the room thoroughly when you are done.