The last few bands I've been in have been a mix of Gumtree and going to a music institute and advertising there. I've never been lucky enough to already know a guy that can play drums or "that bassist who lives round the corner" so all the band members I've met have been via the internet and auditions most of the time. Sometimes its easier if you already know the "guy who plays drums down the road" and you've been mates for years the transition from that to a band member is pretty simple, cos you already get on well.
Being in bands tells you a lot about other people's personality, if you can rely on them, how easy they are to work with, what their ambitions are like etc etc. As I've gone from band to band slowly the quality of the music but also the personal goals of the members have improved. Now I'm in a lineup with some really good players, we've all been in touring bands in the past and are quite experienced.
As for the songwriting issue, we're pretty bad at it! Being 5 pretty strong minded individuals its sometimes difficult to all meet in the middle somewhere, as one person wants the song to sound a certain way, then another thinks differently. It's not one person who write the whole song, one of us (usually one of the guitars) comes in with an idea and then we try to develop it together. Some sections are debated, like if it sounds better this way, etc etc and that's when tensions can build but you gotta do the best for the song. To keep 5 guys pretty happy in one setting is a task in itself, but don't all bands go through this?
Getting anywhere in an unsigned band is very difficult these days, cos there's very little (or none at all) these days. Not that we all want to be sellouts but it would be great to make money from being in a band wouldn't it? Even if it was operating at a comfortable profit so your bills were paid and you could live. I've seen many of my friends in unsigned bands split up after 5 or so years cos they're pouring so much money into it and not getting much back, and real life starts to take a hold, whatever that might be, moving away, going to study, getting married, job promotion/relocation etc etc. Touring life starts to take a hold on you too esp if you've got any ties (gf/wife/kids, etc) and you end up being detached from your mates.
This is all subjective however as some people are content with just jamming on the weekend or weekday evenings whilst holding down a full-time job, others are constantly touring and having to do supermarket or pub shifts to keep the money rolling in.
I won't lie, nothing beats that half hour on stage rocking out your tunes YOU'VE written. But at the end of the day is it al really worth it?