First of all, make your way to Basalt, CO from whatever direction you live. Most will likely be coming from the I-70 corridor and Glenwood Springs, but some may be coming from Independence Pass & Aspen. Either will use CO 82 to arrive at Basalt. Be sure and take the main exit off CO82 (there's a traffic light there) that leads into downtown Basalt. In Basalt, you will be taking the main street through downtown called “Midland Ave.” This then becomes CR104 and heads east toward Ruedi Reservoir. On Trails Illustrated, this is designated as CR 4 or "The Fryingpan River Road." This is a pleasant, shoulderless road with lots of curves so you have to keep your speed down. Continue on the winding road as it gains elevation around the north side of the reservoir, then drops back down to water level at the inlet on the east end. Once this road crosses the river at the inlet to the reservoir, it’s 4.1 miles to the turnoff for FR/CR501 (or 4B on Trails Illus.) to the left. Continue SE past there, remaining on the paved road. (On FS2016 maps, this road is becomes designated as FR105.) Next will be a turnoff for the Chapman Reservoir & Campground. Continue past that turnoff as well remaining on the paved road for another 4 miles to an intersection. The left fork heads for Hagerman Pass. Take the right fork which is FR 505. The road turns to graded gravel and swings west and south around a forested ridge before turning back to the SE. Follow the road 6.6 miles to where it dead ends at a gaging station. Parking here serves as the trailhead for both Lilypad Lake (off to the north) and The Fryingpan Lakes which are south. Though passenger vehicles can make it to here, we would suggest that you may feel a little more comfortable driving to here with a vehicle that has some extra ground clearance and can handle several miles of dirt road.
The nearest Forest Service campground is the one back at Chapman Reservoir. This campground is 29 miles east of Basalt. The drive will take nearly an hour because of the winding road up to and around Ruedi Reservoir. Sites may be reserved in advance but there are some walk/drive in sites available as well. The campground has vault toilets and drinking water. Last known fee was $25 per site. There are 78 sites for use.
There is also room at the trailhead for vehicle camping and possibly a few tent sites nearby, but there are no facilities so bring your own bucket. Since the 6 mile long FR505 road that takes hikers back here basically contours for that distance all along a mountainside, there are really no good places to camp until you arrive at the gaging station and trailhead.