Its only my guess, but I think that usually people would not bother creating spells, and they probably have to be ministry approved. dont think it is totally illegal though, because snape probably would have not written them in his textbook if it was. as to creating spells, I guess he would use existing spells and mix them together, Like in COS, Harry uses the tickling spell "rictumsempra" which sounds very simelar to "sectumsempra" only one tickles and the other cuts into the person.