The military used to issue a top sling adapter kit, not sure if they still do or not. Anyway you can pick one up at most places that sell mil surplus stuff. It consist of the metal paper clip type thingy, that others have referred to, that attaches the sling to the front sight, and a piece of nylon webbing that loops around the buttstock, allowing the sling to attach to the top. The metal clip goes between the barrel and the gas tube part of the front sight, so it doesn't float around too much.
I used to have this setup on a rifle and it worked fairly well. The metal clip on the front sight does make some noise and will start to wear off the finish where it comes in contact with the front sight. The sling will interfere with anything that is attached above or on the left side of the handguards. Shouldn't bother the scope on the flattop though. Most pics I have seen of its use in the military, have the nylon loop on the stock taped down, so that it doesn't slip off the back of the buttstock. The loop goes through the sling swivel on the bottom of the stock, so the sling won't fall of the weapon, however, the top of the loop can slip off the end of the stock so that the sling isn't being held above the stock anymore. Not sure if this makes any sense, but it will once you see one attached to a buttstock.
The movie "Blackhawk Down" shows it being used by the ranger guys. Check out the movie if you want to see how it should be deployed. The 1984 marine version of the technical manual for the M16 has instructions on how to attach the sling to the rifle using the top sling adapter kit, not sure if the newer version has instructions though.