*checks again, finds same passage in SRD*
Weird. That is worded so badly it hurts. I think the intent is still to allow the creator to choose powers/purpose/etc.
Step 1)
"Time and creation cost are based on the normal item creation rules, with the market price values on Table: Item Intelligence, Wisdom, Charisma, and Capabilities treated as additions to time, gp cost, and XP cost."
[As I understand this, determining the item's capabilities include determining it's powers & special purpose.]
Step 2)
"The item’s alignment is the same as its creator’s."
[ok, no problem there]
Step 3)
"Determine other features randomly, following the guidelines in the relevant section."
[Translation: If you're making an intelligent weapon, go look in the weapon section for weapon abilities. If you're making an intelligent staff, go look in the staff section for staff abilities. Etc]