Sometimes I work off of lyrics, but more often then not, the musical idea comes first.
I usually decide what key I want to play in, then start working on chord progressions and riffs in that key. I use modes to link the ideas together.
Once I have a rough idea, I cut a quick and dirty demo with a drum machine.
The song gets refined with the singer, and that's when I usually add the instrumental/solo sections.
Then I make a really fleshed out demo, with much more solid (programmed) drums, harmony guitars, temp solo, bass ideas (if I have any) etc, of the final idea.
Once it gets the okay from the singer, the song is done!
You can check out the song
NEAR DARK at this location for a sample of what the finished product sounds like ...
http://www.soundclick.com/bands/0/twilightodysseymusic.htm