Note the exact edition you've got at the beginning (so you can probably track it down again if your copy is lost/sold/destroyed/whatever) then feel free to use page numbers liberally to reference stuff you don't want to copy completely. Consider using a set format, maybe with a box around it or something, for making note of extended quotes or passages you want to refer back to in the work—something like two lines consisting of a short phrase describing it (this is just for you to recognize later, don't worry about precision or even making sense), the first few words of the quote, then a page number(s).
Use headings however they make sense to you. Chapters/sections from the book are usually all I use.
I use notebooks roughly trade paperback sized, 120-200 pages. Can usually fit a few books in each one. Keep a separate sheet or (much smaller) notebook for a global alphabetical (or whatever makes sense to you) index of the notebooks to answer "which notebook did I use for that book I read six years ago, again?" questions.
Done right you can use these, with the book itself, to do super-fast refreshers on the high points of a book. Really handy. If you want to use it for that, include very rough plot outlines and such, too, at least for fiction. Bonus: writing all that stuff helps you remember some of it unaided, too.
I also wrote down references to pages, paragraphs and sentences, etc. on those cards, e.g. p42p3s5.
Nowadays I just make a light x in the margins, with a pencil (so that I can erase it if I want to).