A disco ball consists of mirror pieces attached to a sphere. When a spot light is shined at it, the ball reflects the light like any normal mirror would. It helps to think of it as a normal mirror when you're positioning the lights. However, because the mirrored surface is curved and the pieces are not continuous, the result is a grid of light reflections. Also, like a normal mirror, it will reflect all the lights you aim at it.
You need at least two lights on opposite sides of the ball to completely light it. The result will be two strong fields of reflected light with two fading regions in the middle. This is because of the ball-shape -- as light becomes closer to tangent when it strikes the ball, the reflection becomes weaker. While adding lights in a geometric fashion, this problem can never truly be solved. However, positioning three lights in a triangle formation or four lights in a square formation will begin to disguise this fading.
The angle of the source light will dictate where the reflections end up. To have the reflections appear on the ground or lower walls, the light needs to come from below and only hit the lower half of the ball. To have reflections on the ceiling, light need to come from above and strike only the upper half of the ball. Play around with the angle and positioning to see which result works best for your space. For best results, light the ball with sources from both above and below it.
Any normal lights such as neon, strobe or gels can be used to accent your space to make the disco ball truly stand out. These lights act as spacial constants, while the disco ball continuously spins, and they will also add some warmth or style to your space. Also consider placing metallic, reflective objects in your space as well. These surfaces will reflect the light from the disco ball and create sparkling effects. Metal, mirrors and glass work great for this purpose.