PRACTICAL APPROACH to know On which columns of a table & when we have to apply indexes?

Dear All,
I know that by default Microsoft SQL creates Clustered Indexes on Primary Key fields of a table & if some performance issue is there to extract data from Table then we have to check on which field we can create Non-Clustered index & implement the same to improve the performance.
Above-mentioned paragraph is completely based on knowledge gained theoretically.
Now, my doubt is related with Practical working.
In Practical, how can we know that XYZ Table has performance issue & on this-this columns of XYZ table, we have to create indexes & in index definition which columns we have to define in INCLUDE COLUMN definition.
Can anyone suggest PRACTICAL Approach to know on which Columns of XYZ Table & when we have to apply Indexes?
For Example: -
I have a cursor to check file exists on server or not. If exists then updates IsExists field by TRUE else by FALSE.
/*--<><>----<><>----<><>----<><>----<><>----<><>----<><>----<><>--*/
Table used in this Cursor is XYZ TABLE & Structure of this Table: -
Column_name~~Type~~Length~~Nullable
SchoolCollegeCode~~varchar~~5~~no
SchoolCollegeName~~varchar~~100~~no
StntPkey~~int~~4~~no
Student_No~~varchar~~16~~no
SchoolCollege_Pkey~~int~~4~~no
ImageAddress~~varchar~~500~~yes
IsExists~~varchar~~10~~yes
I have no Index on this table.
/*--<><>----<><>----<><>----<><>----<><>----<><>----<><>----<><>--*/
After run the below cursor for DUMMY Values, there is no row exists in any of the below mentioned DMVs used to Identify Missing Indexes: -
/*--<><>----<><>----<><>----<><>----<><>----<><>----<><>----<><>--*/
sys.dm_db_missing_index_details
sys.dm_db_missing_index_group_stats
sys.dm_db_missing_index_groups
sys.dm_db_missing_index_columns
/*--<><>----<><>----<><>----<><>----<><>----<><>----<><>----<><>--*/
The code of cursor: -
/*--<><>----<><>----<><>----<><>----<><>----<><>----<><>----<><>--*/
begin tran
declare @FileNamewithCompletePath varchar(500)
declare @StudentPkey int
declare @SchClgePkey int
declare @Check int
set @FileNamewithCompletePath = ''
set @StudentPkey = 0
set @SchClgePkey = 0
set @Check = 0
declare PhotoExistsPhysicallyorNot cursor for
select ImageAddress, StntPkey, SchoolCollege_Pkey from XYZ /*where SchoolCollege_Pkey = 1 and StntPkey<=500 */
order by SchoolCollege_Code, Student_No
open PhotoExistsPhysicallyorNot
fetch next from PhotoExistsPhysicallyorNot into @FileNamewithCompletePath, @StudentPkey, @SchClgePkey
WHILE @@FETCH_STATUS = 0
BEGIN
exec master.dbo.xp_fileexist @FileNamewithCompletePath, @Check output
If (isnull (@Check, 0)=1)
begin
Update XYZ set IsExists = 'True' where SchoolCollege_Pkey = @SchClgePkey and StntPkey = @StudentPkey
set @Check = 0
end
else
begin
Update XYZ set IsExists = 'False' where SchoolCollege_Pkey = @SchClgePkey and StntPkey = @StudentPkey
set @Check = 0
end
--
if(@@Error<>0)
begin
print 'Error on ' + convert(varchar,@FileNamewithCompletePath)
end
fetch next from PhotoExistsPhysicallyorNot into @FileNamewithCompletePath, @StudentPkey, @SchClgePkey
end
--select @PPkey
CLOSE PhotoExistsPhysicallyorNot
DEALLOCATE PhotoExistsPhysicallyorNot
rollback
commit
/*--<><>----<><>----<><>----<><>----<><>----<><>----<><>----<><>--*/

Dear Satya,
Thanks for the reply. But, again a complete article with theoretically details. I need PRACTICAL APPROACH, on which Columns of a table & when we need to create Indexes to gain top performance from SQL Server?
You can take Cursor example mentioned in my post to guide me.
Thanks & Regards,
bsethi24

Hi there,
this might help you, suggest the missing indexes in actual execution plan
http://weblogs.sqlteam.com/mladenp/...008-suggests-missing-indexes-with-actual.aspx
Cheers