Scan each paper for any glaring errors, such as a missing bibliography or improper formatting, and then read it through once. On this reading, you will quickly get a sense of what the student has to say, how well-written the paper is and the student's pattern of errors. Also at this point, you quickly find out whether you should return the paper to the student ungraded because it's handwritten, lacks a bibliography or does not meet some other basic requirement.
Read each paper a second time, this time inserting comments, questions and editorial marks. If the student makes a lot of mistakes of the lower order concerns, or LOCs -- which include grammar, mechanics and spelling -- stop marking each error. Do mark at least one example of each type. Then make a list of the student's types of errors on the last or first page. Include a note to the student to work on these errors, either with a tutor or with you. Consider whether to withhold a grade until after the student has received help and revised the paper.
Continue reading to evaluate content and higher order concerns, or HOCs. In other words, review the global elements: focus, thesis and its development -- including credible support, logic, tone and organization. If it is lacking, many instructors also weigh significance or whether the topic was worth addressing in the first place. Generally, if a student does not perform well on any one of the higher concerns, it seriously affects the paper. Note specific problems so that the student will learn from her mistakes.
Stop grading any paper that has so many errors in it that you risk spending more time analyzing and making notations on it than the student did writing it. Either fail it, noting why, or give it back without a grade and instruct the student to revise it and hand it back in. Also note that you will automatically lower the earned grade by one full letter, or by whatever your policy calls for, on the revised version. So if the student gives you a revised B paper, give it a C with a note reminding the student why. This is only fair to students who took the assignment seriously, and it provides an incentive for the student in question to improve and do likewise in the future.
Give each paper a grade. Weigh higher order errors more heavily than a few lower order errors. Each HOC error will probably lower the grade by at least a full letter, whereas a few minor LOC errors might only lower it by half a letter. Use fair but consistent judgment in each case.