While it's unknown as to how the godstone itself was forged, the enchantment process is documented in chapter 5 of The Book Of Thur:
Reorx: "Well, Thur, it looks like you've been chosen to be the one to enchant the last godstone. May the greater gods have mercy on us all." Thur: "Oh, well, alright, uhm, I'll name it, uhh, Punch." Reorx: "..." Thur: "And it'll give you the power to, uhh..." Reorx: "Please don't." Thur: "Punch things. Really hard." Reorx: "...Paladine, get in here please."
Punch was one of the godstones, and held a strong religious significance, being the symbol of the Holy Order Of Thur and Thur's most important vestige.