Hooking it all together -- I start with the story, i.e. the lyrics. I let the lyrics move the song along.
The story leads to verse structure. I like a four line verse, rhyme or not depends how I feel.
I pick a cookie cutter chord progression I IV V7 I to start with and tie it to the lyric words like this - for a first draft:
Verse starts and ends with the I chord. The IV chord comes into play toward the end of the first line. The second line continues with the IV chord and then somewhere toward the end of the second line the V7 chord comes into the song. The second line ends back with the I chord. The 3rd and 4th line repeat this same format. Review -- I break the four line verse into 2 parts. First two lines will start and end with the I chord. The V7 chord is a climax chord, where does the climax happen? Toward the end. So my V7 chord is placed near the end of the 2nd line. The IV chord fills in the middle.
Now you notice I say somewhere, reason for that is I can not place the chord exactly where needed because that depends on the melody notes. Remember this is a first draft. Melody line and chord line should share some of the same notes. When the melody line moves on to notes not found in the old chord you go out of harmony and need to find a chord that has some of the melody notes in its makeup.
And I have not written the melody yet. So ......
For the melody I move on to the keyboard. Much easier on the keyboard - an inexpensive keyboard is all you need. I write in D because I like to sing in the Key of D. Write in whatever key THE vocalist you are writing this song for sings in. If no one in mind then C is the easiest to write in IMO.
OK first chord is going to be D and lets say the first word is "Never". OK back to the melody and the chord should share notes. D's notes are D, F#, A. Recite the word "Never" and sound the D note. How does it sound? Do this again with F#, then A. Which do you like best? Well the first thing I found is that "Never" is going to take two notes as it is a two syllable word. I like D F# the best. Melody will normally have one note per lyric word, yes multi syllable words take more than one note, but, use the one note per lyric word as a guide. I really like drawing my melody notes from the chord's pentatonic scale. Pentatonic scale will give you three chord tones and two safe passing notes. Enough for a first draft.
What is your next word? What notes sound good with it?
Keep going. Sing the lyrics and find the melody notes that flow with the lyrics. Use the chords as a guide. You've got 7 notes in the D scale. I bet that will be enough to write a pretty good melody for the chord progression you already have.
OK this gives me a lead sheet on the song. Lyrics, treble cleft, chord names. Before bass that was as far as I went. I wrote lead sheets and lead sheets do not have a bass cleft. If you do not want to leave the bass line to the bassist then write out your bass cleft. Understand it's a chicken or egg thing. Some will write the bass line first. Others will write the melody first. I write the story first. Really does not matter which comes first its when you end they all must work together.
Now take all this to Mary Had a Little Lamb and write the melody to this nursery rhyme. I think that will let you see how everything falls into place and fits together.
This may help;
http://www.youtube.com/watch?v=vrDh0OFDCAk
Have fun.