the house was wired with what was like Romex today - 2 wire sheathed in an outer fabric cover. if it was fmc then I could use that for the ground.
as far as doing the work it's not a problem. I have already added / changed circuits / wiring in this house to code and with permits.
I am more interested to know how it's typically done - the neutral buss is connected to the cold water pipes with #6 solid copper, but that's it for grounding.
in new construction are the neutral and ground circuits isolated from each other - meaning the ground has it's own buss and is connected to a ground rod, and the neutrals are connected to the neutral buss. if thats the case how do you retro and old 2 wire system? add a ground rod, add the ground wires, then move the existing grounds from the neutral over to the new ground buss?
etc etc
The ground and neutral are isolated ONLY AFTER the service point; not AT the service point.
The power company supplies only the two hots and a neutral such as you already have.
The ground for what you call a "3-wire" system is connected to the neutral bus at the location where the service is connected.
That ground/neutral buss is connected to the water service pipe or to ground rods or both. The code now requires ground rods in addition to the water service pipe.
The neutral and ground of all of your grounded branch circuits that are connected to that main service panel are ALSO connected to that ground/neutral bus.
The ground and neutral are thereafter NOT connected to each other and the neutral is not connected to ground at any sub-panel that you may install.