See pp 272-275 of Brian Bischof's book
Volume 1, Crystal Reports Encyclopedia for all the details. To paraphrase:
"Go thru the process you would for creating a new formula in the Formula Fields list. When the Formula Workshop box appears, you will see a menu item which looks like a magic wand. That's the Use Expert/Editor button. Click on it. In place of the 3 report tree windows you will see Custom Function, Summary, and Function Arguments."
Brian goes into much more detail in his book on what occurs once you click on the Use Expert/Editor button.
Did you know that you can buy his book as an "eBook". In the interest of your sanity -- I'd suggest that you buy it in the "eBook" format to get thru this process and then buy the hard copies as well. I find both formats handy for a variety of reasons.
Anyway -- give that a go!