Web Designing Basics - How do I do it?

[holyhades666]

Hey guys.

I've been thinking about getting into a contest in school for web designing - they'll be providing us with a theme, and we've got to create a fully functional website with it. We get to work in small teams, but that's not the point ... what I really want to know is what kind of process there is behind web designing? Say someone gives you a theme ... for example, air planes (the real one would obviously be more specific). How would you go about designing an awesome, clean, easy to use and overall amazing website for it?

Say I've got a sketch of how I want my site to look on paper, just a rough idea. How do I turn that into a website? Do I design individual parts and then start screwing around with some HTML + flash + javascript and whatnot? Not sure here, first time doing an actual website, but I've got a bunch of experience with Photoshop, and a decent amount of coding experience.

Another (somewhat unrelated) question - when people post images of a website template ... when you get the actual template, does that come with code for the website, or is it just an idea as 1 single image?

thanks for helping,
~Holyhades