The way I've read it in the past, the spell generally won't keep the creature from doing what it would ordinarily do, it just makes it like you. If a goblin likes you, but is still terrified by your companions, chances are good it'll still flee like the dickens. If you charmed a psychopathic murderer and asked him to guard your group while you slept, ignoring duration problems it shouldn't be terribly suprising to wake up to a host of your friend's dead bodies, while your new buddy is cracking jokes and making breakfast, unless you make a pretty good charisma check. Crazy example, but that's intended. It won't keep the mob from doing what it does at all, unless you ask it nicely, as it just regards you favorably- and even then, it probably won't do somethign for you it wouldn't do for any other friend. Charmed or not, if you've cast on a sniveling coward who'd stab his best friend in the back to avoid a lashing, you've got problems.
Who would the creature grapple to keep the two parties from fighting? Well, whomever is attacking is a good starting place, yeah. But if they couldn't make a big difference in slowing down that attacker, I could easily see them grabbing the wizard to defend him. However, simply placing yourself in the path of your ally and turning your friendly tag off, meaning he can't occupy your space, works fairly well too, if they haven't closed yet. Really could go either way, depending entirely upon the situation.
- Kemrain the Charming.