Within Sales Order Items, click Add Item and choose Item type. A Listing Item is an item from your Catalog and a Custom Item is a non-Catalog Item.
Step 2 (Option 1) - Add Listing Item
Select Listing Item. Choose a Listing from your Catalog, set Order Qty and Unit Price. The Listing Price is shown but you can enter a price at your discretion.
Click Save.
Step 2 (Option 2) - Add Custom Item
Select Custom Item. Create items that are not part of a Catalog.