* NOTICE * - Make sure only an adult handles the dry ice package or any container/cooler containing dry ice!!
The way to make fog with dry ice is to put pieces of dry ice into a container of warm water. For example, if you have a scene that has a cauldron in it. Place a large coffee can inside of the cauldron, fill half way with warm water and place a piece of dry ice into it. This will give you the effect of fog coming/floating out of it.
For a added effect - outside of the coffee can (in the cauldron), on the ground or wood platform place glow sticks or a small flash light to make the fog "glow".
There are many different kinds of fog machines at many different prices. It all depends on what type of quality you are looking for or how much money you can /want to spend. If you are just getting started I would suggest one around the \\$99.00 or $199.00 these will do the job at a decent price with good quality. I believe the containers of fog juice are 1 quart and cost around $10.00 to $15.00. You can usually purchase the fog machine at party stores or radio shack, as for the fog juice I have seen it at party stores, Kmart and Wal-Mart.
Using A FOG CHILLER with your Fog Machine is a cooler type box that chills the fog before it comes out, what this does it make the fog stay very close to the ground, instead of floating away higher up.
Fog Chiller from Wicked Makers! Check these guys out on YouTube for a lot more projects too!