How to do public key encryption.
First pick two primes. Normally, these are 21024 or more in length, but for our example, we'll use 7 and 11. For larger ones, the Miller-Jaeshke test or the less accurate but slightly easier pseudoprime test is used to search a region of numbers to find two random primes. These primes are multiplied to generate a number.
Calculate the "phi" of the number (Euler's phi function, a generalization of Fermat's little theorem).
phi(77)=60 phi is used in the congruency aphi(77) % 77 = 1 and is defined by the prime power decomposition where each term is pn becoming pn-1*p-1
70 * (7-1) * 110 * (11-1)

Pick encryption key so that that 60 (phi77) is relatively prime to it. gcd(60,e)=1 say e=7. This is easily done with small numbers. For large primes, it is probably easier to simply pick a third prime larger then the first two you picked.
The will be used for the public key which is sent to everyone. That value calculated further below in the decryption process. Those who receive it have no idea what values were used to create it.
The private key is the values (77,7).

A message, using Kyberneticist's ad-hoc encryption alphabet:

 N  i  c  k  .
40 09 03 11 74

Often the numbers would be joined, say 400 903 117 4 for added security.
In this case, since the encryption is being done for such a small mod (77), this cannot be done (see note further down).

For real encryption number calculated is a bit too large to compute the mod directly. (say, 409(insert a 300 digit number here) % (insert another 300 or so digit here)) Not in this case, but if it were, the solution is to break down the number.
An easy method is as follows (I explain more fully in my pseudoprime node).
(77,7 is key, 407 then %77)
7=bin(111) or 1 + 2 + 4
407 = 401 * 402 * 404 therefore
Table for 40
40%77		= 40
402%77		= 60
404=602%77	= 58

(40*60*58)%77 = 407%77 = 61

Repeat for 9,3,11,74
97%77 = 37
37%77 = 31
117%77 = 11
747%77 = 46

So the encrypted message is 6137311146 or 8KEku in my alphabet

BTW, due to pigeonhole principle, the % values will be evenly distributed over the range 00-76 in a random fashion (well, random to those who don't know factoring of the number being modded by).
The number you are modding by is normally much larger then the number you are encrypting. Say around 21024 in size. But it MUST be larger then the numbers being encrypted, or information is lost. In this case, no number larger then 76 could be encrypted.

To decrypt, you create decryption key from phi(60) and the factors of 77 (7 or 11). Create a decryption key by solving the following equation:

X(e) + Y(phi(77)) = 1
for X (there are a lot of potential X's)

7X + 60Y=1
The solution uses the following mechanical process to the above, which is known as a linear Diophantine equation.
Process known as the Euclidean Algorithm:
a)60=7*8 + 4
b)7=4*1 + 3
c)4=3*1 + 1
3=1*3 + 0
reverse it...
1=4 - 3			(by  c)
1=4 - (7-4)		(by  b)
1=2*4-7    (re-arrange)
1=2(60-7*8) - 7		(by  a)
1=2*60-7*17 (re-arrange)

therefore 7(-17)+60(2)=1
X=-17. This is really the solution to the congruency 7X % 60=1
Since this is a congruency (just accept this :-)), 7(-17) % 60 = 1 is same as 7(-17+60) % 60=1
Positive keys are easier to work with then negative ones, so make X = 43 (-17+60)

This gives the public key 77,43.
Take: 8KEku
convert: 6137311146

do 6143%77
again, by a process such as
43=bin(101011) or 1+2+8+32
Table for 61
61%77=61	1
612%77=25	2
252%77=9	4
92%77=4		8
42%77=16	16
162%77=25	32

40=N - first letter decrypted.
Repeat for the rest.
Congratulations, you have successfully encrypted and decrypted using public key encryption.
Normally, this process, which is slow and requires expensive operations for a computer to do, would be probably used to establish a private key encryption connection.
Feel free to message me if anything is unclear or incorrect - I'll fix it.
- Regarding fixing. I managed to confuse what was being sent out (now corrected). The critical bit is that the information given out cannot include the factorisation.
For private key, you need 77 + <a factor>.
For public key, you need 77 + <a number calculated from the relatively prime value + factor> (factors are kept secret).
This allows the process to be non-reversible.
What the private key mods, the public key decrypts.
What the public key mods, the private key decrypts.