I haven't been able to find an answer to this question for a while now. What is the proper way to write time in a manuscript? I'm referring mostly to A.M. and P.M. Should it be written in caps? With or without the dots? Should it be omitted all together and be stated? ex. "eleven in the morning."
AP Style requires a.m. or p.m. -- lower case, separated by periods. There is no need for an additional period if the sentence ends with the time.
The briefing began at 2:30 p.m.
This would be the correct format for anything journalistic (newspaper, magazine, wire service, etc.) In addition, many other publications and websites will ask for things to be written in AP Style.
The Chicago Manual of Style agrees, except it allows for a.m. or p.m. to be written in "small caps" font. In that case, the periods are not necessary.
In formal non-fiction writing, using normal capital letters is never acceptable, nor is using lower case letters without periods.
For unsolicited novel manuscripts, I've never seen submission guidelines that address the issue. You can check with individual publishers, but I don't think that it matters until you are actually working with them, at which time, they'll give you very detailed specifications for everything you send them in the future.
On the off chance that this isn't a novel, just be consistent. Some writing (academic, non-fiction, and news, for example) is edited to a style guide, and most style guides will have a preferred way to format times and dates.
For fiction, and particularly in dialog, you specifically don't want to come up with a consistent system unless you want everything to seem the same and uninteresting. Characters who are inconsistent in little things like this seem more human and accessible. (For example; As it's now ten o'clock in the evening where I am, I need to get off the web within the hour because I need to get up at five in the a.m.)
I guess it depends on how it's being presented. If a character is speaking the time it would be whatever flows naturally. Most of the time people talk about time in relation to now, so three in the afternoon could just be 'three o'clock'.
On the other hand, when reading a clock (more so a digital clock) it might work best to be very exact with the time like "8:00 AM" because that is how digital clocks normally read.
As for how to write AM/PM? It seems like all caps without the dots is the most common, but most permutations are allowed. Officially they are abbreviations but most people don't use them that way (much like PIN or ATM they are almost words in themselves).
If it's for a novel, then I would say your characters should express the time in the most natural way for them to be doing so. The retired colonel would refer to 'dishes done by oh-nine-hundred' and the slacker teenager would say 'dude, around 8-ish'.
It seems rare to me in everyday living that we talk about A.M./P.M, but in caps with dots is technically correct. I suppose like the colonel and the teen, there's room in a book for the punctilious and punctual. :)
My other thought as it occurs to me about time and this: If you have an omniscient third person narrator telling the reader what time it is (I have no proof or suspicion, just tossing it out) I would re-examine and see if there's a way to put it into a character's voice.
Keep it in context.
You can use it express draw out the personality of the character, by for example omitting the minutes or, going by the other extreme, give full to the second time in a military sounding notation.
If it's not a work of fiction, refer to the locale of your target audience and their preferred format (ie. where you live, what you're writing to and their standards). I don't think there is any particularly wrong way, as long as it flows with the text, but for anything international avoid ambiguities such as the month (ie. write "6th of Jan, 2011", "06-01-2011" which depending on your location may be read as "01-06-2011"). Similarly readers used to the 24-hour system on daily basis can be confused by AM/PM (ie. they swap their meanings).