You need to have the lock of hair in your inventory, not set it up as part of the ritual.
Laufe's almost certainly correct that you're missing one of the ingredients, or else you must not have used them, since the ritual's a part of the game that you could complete since even before CMac took over development.
Did you pick up the chalk at the School, the salt from your Kitchen, the candles and crystal from the New Age Store, the hemlock from the Wild Ranges, the chalice from the Church, the dagger from the Church Basement, and skulls from the Church Catacombs, Graveyard, or secret third location? After you use (make sure not to drop) all the items except for the lock of hair, the option to "Start the Seance" should appear. When you use the skull, if you have multiple, it should give you an option for which skull to use.