I guess you are talking internal keyway. The usual tool is like a boring bar but with the tool bit turned at right angles. It needs to be mounted suitably near the bottom edge of the clapper box, and there are a number of ways to do this. It is probably less likely to dig in if you cut on the pull stroke, and this will require locking the clapper. Ideally you should also reverse the motor since the return stroke is faster than the outward stroke.
The motor direction is also relevant to Alans original query… for normal cutting the bull wheel should rotate clockwise when observed through the door. Or to put it another way, the crankpin should be on the top as the ram goes forward on the cutting stroke.
You can also do keyways in a shaft with a shaper, but you need to drill a hole at the end for the tool to drop into, or both ends if it is a blind keyway in the middle of the shaft. Some shapers are arranged so that a shaft can go right through the machine so that keyways can be done on the middle of a shaft.
regards
John