1. You work through the level 1 spell list until you run out of spells or the number of spells known is equal to the max number.Swords and Wizardry Complete adds a spell level cap to the Intelligence score. The reason I was looking into the understanding thing was because you need to understand the spell to put it in your spell book.
2. If you have not hit your max but you are over your min, you are done.
3. If you have not hit your max and are still under your min, roll again for the spells you did not get last time until you are over the min. Repeat until you are over the min. Now you are done.
After that, when you get a new spell you roll to see if you understand it. When you level all the spells you have that you don't understand you can check again for. While a caster cannot understand a spell they can still discern the complexity of the spell (i.e. the level). Additionally a caster can take a week per spell level of uninterrupted study in an attempt to understand a spell. At the end of the time the player rolls to see if the caster learned the spell. A caster can try again as often as they like. Remember there are 52 weeks in a year.
Now, the big question I have for AD&D is: Why can I copy spells into my spell book, and if I so choose cast those spells out of my spell book as if they were scrolls (where they disappear off the page) but cannot create a scroll itself? If you can copy a spell from a scroll into a spell book, why not be able to copy a spell from a spell book to a scroll? Why wait for 7th (or 11th) level? Holmes makes the most sense here. If you can understand a 1st level spell, and have it in your book then you can copy it to a scroll. ChicagoWiz makes the point that Holmes does not mention the cost of copying a spell into a spell book. I think the cost unilaterally (OD&D, AD&D, Holmes, B/X, 3e etc.) is that you no longer have a scroll. But I figure that copying is copying and costs the same in all directions.
The time to create is pretty much a DMs call depending on how much he thinks the characters should be scribing. Holmes' week per level of the spell is probably based on the time that it took for a medieval monk to write a page of an illuminated manuscript working 6 hours a day for a week. But if you want the game to be run on the pursuit of treasure so you can pursue more treasure then you need things that the characters can spend their money on (like carousing). Scrolls become empty when they are used. That's a good hole in the pocket if I ever saw one. So I am tempted to say that it should be a day per level rather than a week. You still get PCs wasting a lot of time and also get them wasting money too.
Though what I might be inclined to do is this: if you want to scribe a scroll you need to gather the materials and set up a work space. This takes a week for whatever spell. Once you have set up shop you can pop them out at the day/level rate. But if you want to change spells, you have to "retool" your workspace and that takes a week. But then you hit the math-you-thought-was-small wall.
Here is my house rule on magical writing basics:
Spells can be stored in one of two ways: spell books are a kind of "permanent spell library" and a scroll is a kind of "temporary spell library." You can make copies from a permanent spell library without loss. Copying from a temporary library causes the loss of the library. Casting from both causes loss on both. Spell libraries can come in all different forms but involve writing and the above stated loss on casting or transferring.*Images from "ah-art" and "bloodmoonequinox" from deviant art respectively
To transfer a spell between libraries it cost 100gp/level of the spell. The time it takes is either 1day/level of the spell or 1week/level of the spell at the DMs discretion.
Research costs 1000gp/spell level and takes 1month/level to complete.
If a permanent spell library is destroyed memorized spells can be replaced in a day. Unmemorized but known spells are replaced as per the transfer rules or research rules as per the DM's discretion.