Re: How does one actually begin to produce albums for sale as an indie label?
For an overview, Read the recent book by David Byrne. "How Music Works". There are six methods to make/market your music as described in one of the chapters. The 'old' model (advance up front) is going the wayside, and ripped off most artists anyway.
Different pros and cons of each.
As to the legal stuff you'll have to research that as it varies by country.