My point is that by your interpretation, the fighter ought to be able to move past/away from the giant to the goblin, because he's going into melee. And then he should be able to Retreat from there and only get attacked by the goblin. And that makes no sense.Now that I'm home and looking at the rule, you can flee in almost any direction you want, the enemy(s) just get attacks on you. It just says you turn your back on the enemy and run, so it would have t be away from the big guy somehow. Otherwise your back isn't turned when you start moving away.
Withdrawal also says away.
So while it would be a poor choice, by the rules the above route would work. I'd go diagonally down and left, though, heading away from both.
That's not what the rules say, though. If you retreat, it MUST be away from the guy in your are fighting, where if I move to the wizard, I can go forward past the guy I'm fighting.
As a DM I'd probably house rule in an attack against you as you leave to go to the wizard, but that's not the written rule.
You do recognize that the two pictures are basically the same situation, right? In one the fighter is leaving the giant to move on to the goblin, and in the other they're leaving the goblin to move to the wizard.
I'm not arguing that you couldn't interrupt casting in 1e. I'm arguing that the initiative rules were convoluted enough that it's unclear when casting starts and ends. And in the light of this lack of clarity, it makes sense that people would come up with their own solutions.1e spellcasting worked the same way. Here is the rule.