check if email exists and login

Hi,
I'm trying to design a process for users to either 'login' or 'create an account'.

1. Form where user enters email address.
2. email address is looked up in database to see if it exists.
3. If it exists, user then prompted to enter password. (or if remember password checked previously, it is entered.)
4. If email does not exist, user prompted to check it, try again, then insert record if does not exist. New user then prompted to create a password.
5. Move onto custom checkout forms.

Though I see a number of ways of acheiveing this, to save time, I want to start using the best approach and get it right first time (as if!).

Could you advise me on whether the following is a good approach or whether you know of a better option:

-Use security assist to create login page/s.
-Use spry validation on login page to check email address in database. Create a session variable with email address.
-Use hide/show regions.

Thanks,

Ben