To the left is the 'Battle Animation' menu that allows you to choose which animation you will edit. Below is a so you can choose the max number of available animations in the above menu. Options are all at the right.
Name- Name the animation.
Select Battle Animation- Here you can choose which animation this move will use by clicking on the button.
Target Victim- You can choose which monster is on the diagram in the middle of the area. This is so you can test your animations on different monsters.
Frame No- set how many frames will make up the animation.
SE Animation Timing- double click in the menu to set a sound effect to play at the frame which you choose. You can also set a flash to occur at a certain frame, either flashing just the opponent, or the entire screen, and even the color of the flash.
Apply Scope- Choose Single to have both vertical and horizontal green lines in background of central diagram, or choose 'all' to have just a vertical line. I'm not sure what the use of this option is :)
Y Coord. Line- Set where the horizontal line is in the central diagram, either at the bottom of the monster, the middle, or the top.
Frame- Choose which frame is displayed at the central diagram to the right. In the central diagram you can move around the animation pics to where they look most appropriate. They should be outlined by a box which you can drag to different areas of the diagram. The options at the right of the central diagram are just used to further edit the animation sequence, and I won't go into detail on those. The button simply pulls the animation from the previous frame. The button plays the animation. If you need help with the middle three buttons, ask in the forums or chat. To add frames of animation, go to the frame you want to edit, and you can click on the animation frames at the bottom and then click on the central diagram to add them to that frame as you wish. Then you can continue on with the other frames, etc.