It all starts with something I hear in my head. The first thing I have to do is make sure it's not something I'm remembering from somewhere else. Usually, though, I know. Then, if I can get to a guitar I'll try to write it out. If I can play it a few times, I'll remember it.
Writing songs became a lot easier when I got Drumkit From Hell. The first Frost Giant demos are... rough. After DKFH, though, we were able to bounce the DKFH files to WAV format and dump them into Garage Band. Then I would layer guitars and bass using the Line 6 guitar port, then vocals. On the Frost Giant page here, tracks 1, 4, 5, 6, 7, and 8 were recorded that way. Tracks 2 and 3 we used the programmed drums but set up a live amp for the guitars and bass.
While we wait to buy more studio equipment so the actual band can re-record all those songs, I am writing new material using DKFH and my acoustic. I just program the drums and play along.