In the Major System, do you encode the spelling of a word or the sound it makes?

The sound — only the consonant sounds you actually pronounce count; spelling is irrelevant.

This is the single most important rule. Letters are just clues to sounds:

• "action" encodes 762 — /k/·/ʃ/·/n/ (k-sh-n), not the letters c-t-n.
• "daisy" encodes 10 — /d/·/z/, because the s is pronounced /z/.

Get this wrong and everything drifts. Always say the word out loud and listen for the consonant sounds, not the letters on the page.