I can't tell you off hand what the algorithm for the default starting values is, but I believe in many cases it's going to be loadings and variances of 1.0.
How to choose starting values depends on your model and data. For example if your S matrix has diagonals (variances, i.e. heritabiliteis) that are very small, then you should probably specify start values for variances that are much lower than 1.0. If you have some variables that are negatively genetically correlated with one another, you would probably benefit from having some factor loadings or regression coefficients set to have negative starting values. When using unit loading identification you might also switch the reference indicator to the one with the largest genetic correlations with the other variables in your model. Choosing sensible identification strategies and starting values can be a bit of an art.