You basically have it.
How much water to mash? Between 1qt and 2qts per pound of grain. I like 1.25 or 1.5qts per pound.
Measure how much wort you get from the first run off and subtract that amount from your desired preboil volume (probably 6.5 gallons) to get your sparge volume.
You really don't want to top up your fermenter with pure water. It's better to sparge enough and boil down or efficiency suffers.
This is a copy/paste out of my all grain primer:
The Single Kettle/Burner Method with a simple picnic cooler MLT:
First you're going to figure out based on your grain bill, how much water you'll need to make the ratio 1.25qts/lb. Example, if you have 12lb of grain 12 x 1.25 = 15 quarts or 3.75 gallons of "STRIKE" water.
Heat strike water in your kettle to ABOUT 185F and dump it into your cooler, then close the lid. Wow, doesn't that seem a bit hot? Your cooler is going to absorb quite a bit of heat in the first 5 minutes. Leave it alone with the cover closed to let it warm up. After 5 minutes, open it up and stir the water, then test the temp. You're going to want it to cool to about 168F. Remember, software will help you figure out exactly what temp to use. Once you reach your ideal strike temp, dough in (mix the crushed grains in thoroughly) then close the lid.
After 5 minutes, open the cooler, stir once more and check the temperature in various places. Again, you want it to settle to ABOUT 152F. If it's a degree or two high or low, it's OK. If it's off by more, you might want to compensate with a little cold or boiling water. Once you're satisfied, close the lid and wait 60 minutes.
After about 20 minutes, you'll want to start heating your sparge water in the kettle. You'll need ABOUT the same volume as your intended finished batch. If it's a 5 gallon batch, heat up 5 gallons of sparge water to 180F.
After the full 60 minute mash, open the drain valve on the MLT and collect 2 quarts of wort into a pitcher. Carefully return this back on top of the mash (this is vorlaufing), then drain the entire MLT into a bucket. If the bucket has graduation marks, take note how much wort you collected. You're going to find that you lost a good percentage of liquid to grain absorption. In our example, it's likely that you only got out 2.5 gallons from the 3.75 strike volume. Here's where you have to decide ultimately how much wort you want in the kettle to start with. You will boil off about 1.25 gallons in 60 minutes of vigorous boil so you'll want at least 6.5gallons to start with. To figure out how much to sparge with, take this pre boil figure (6.5) and subtract it from how much wort you collected out of the MLT for first runnings (say 2.5). This leaves you with 4 gallons. This is exactly how much you'll need to sparge with.
Assuming you got the sparge water up to 180F, pour about HALF of the required sparge volume into the MLT (in the example it will be 2 gallons. Stir it well for a couple minutes, vorlauf 2 quarts again, then collect it in the same bucket the first runnings are in.
Repeat step 6 again with the remaining sparge volume. At this point, you should have about 6.25 gallons in the bucket. You can also split this amount between two buckets to make handling them easier.
Remove any excess water from the kettle and carefully transfer all your wort from the buckets into the kettle. Stir this wort up and draw off a bit to measure your pre-boil gravity and take note of it. You'll also need an accurate measurement of how much volume you collected. Once you have these two numbers you can figure out your mash/lauter efficiency as explained earlier on this page.
Proceed as you normally would for an extract batch. You've just made your own wort without "instant beer".
