THE EARLY PAGES of William Kennedy's Legs, the novel's narrator, an Albany lawyer who's become bored with the easy loopholes and conventional hypocrisies of his profession, gives us a first impression of the gangster, Jack "Legs" Diamond, for whom he'll soon work, by whom he'll be forever haunted. "Jack responded by standing up and jiggling, a moving glob of electricity . . . Whatever you looked at was in odd motion . . . (As if he were) ridding himself of electricity to avoid exploding." Reading that passage, those who know its author could only smile at the recurring picture of William Kennedy in similar, incandescent motion. For him the word "repose" has no conceivable application. In fact, as you watch him in mid-conversation abruptly, with swift and serious purpose, stride the length of a kitchen, head down as if counting the tiles while he continues to make his point, or pause between bites of dinner to scribble furiously in his notebook (he habitually, unabashedly, takes down phrases that ring, pieces of thoughts that might grow), you can't help wonder how he quiets all that energy enough to sit still and write books.

But he does, for he has now filled four published novels, all of which have as their setting the city of Albany, where Kennedy was born, raised, lived most of his life, from which he fashions vivid, sepia-shaded myth. And like all regionalists, his root-place, his Albany, is specific and universal, temporal and timeless, a seamless fusion of precise genealogy and fictive population. It is seen with a creative perspective that perhaps one can achieve only by leaving for a time.

"I suppose I had to go away to find out what I could do," Kennedy says. He sits at his writing desk, rocking in a wooden chair that squeaks when it moves, like a wooden ship in an easy current. He has receding red hair, a thin Irish face, looks years younger than his age, 54. He began to write as a newspaper reporter in Albany and his study looks appropriately like a set from The Front Page. Huge wooden desk, antique manual typewriter. ("I've always felt I was born out of time," he said. "I've always wished I'd lived in the '20s. The writers. The life. It all seems so much more interesting than the '40s, when I grew up.")

"When I was a reporter here, I wrote stories on my day off and they were set in Albany and they were lousy. Then I went away, and worked in Miami and in Puerto Rico. In San Juan, I tried the same thing. I wrote stories about Puerto Rico, and I didn't like them, either. Finally, I said, the hell with it, I'm going to write about Albany and it was the first time a place truly engaged me. I think I needed to be in San Juan to sufficiently fictionalize Albany as a place. I started a novel, and every day I amazed myself at how much I knew about the people I was writing about. I had a concern for them. There was a substance to them that made some sense."

So, having found the needed fictional terrain, he realized how much he needed to know about the real place, its history. "If I was going to write about an Albany, I had to know a lot more." He began a "San Juan to Albany shuttle," returning to question his family about the town of its collective memory: Tell me about the Erie Canal. What was Colonie Street like at the turn of the century?

He also learned during the process that as much as he loved the world of newspapers he wanted now to be a fiction writer. "I wanted to say something that wouldn't disappear tomorrow afternoon." He came back for good, to write the lies of fictional truth.

All Kennedy's work balances elements of surrealism and reality to create what he calls, "implausible but real worlds." The evolution of that balance has been ever more toward a grounded realism out of which marvelously bizarre moments spring, ascend, and return again with full authority to the narrative earth of the novel's events. In Kennedy's world, a maddened terrier leaps over an ocean liner railing to suicidal death; a woman pauses at "Legs" Diamond's hotel dining-room table to pay him tribute and drops the strap of her evening gown to fill his coffee cup with her breast's milk; an aristocratic matriarch chews tobacco which she genteelly directs toward a silver spittoon. And yet these flights, increasingly so with each novel and therefore especially in the liquor-dreams of Francis Phelan in Ironweed, are fueled by a kind of subconsciously rooted logic--be it sexual longing, alcoholic delirium, the propulsions that take us all quite properly to fantasy.

"I've always been taken with dreams, and I don't know why. But then it's the two things we do, isn't it? We live and we dream. The idea that you could tell a story within the context of dream imagery has always just fascinated me."

So has sin, and the resulting guilt, which takes the form, in Ironweed, of scars on Francis Phelan's soul.

"It's silly to call the work simply 'Catholic,' " Kennedy insists, "but the Catholics have done such a great job defining sin, I figure why not use it? I mean, they're just so good at it. And I think that's what's wrong with much of modern literature--its vapidity of guilt. I read so many contemporary writers who I find interesting while I'm reading them and totally forgettable once I'm finished. I'm not thinking of anyone in particular, just the whole body of it. And I think it has to do with the thinking that sin can be expiated through psychoanalysis, or health food or group gropes, and that if we all just 'let go' of it, sin will be eradicated. Well, it seems to me that if it's possible to clarify your dilemma that easily you haven't had much of a sin in the first place and that kind of thing in literature doesn't interest me."

He's more animated, by the familiar infusion of that heated enthusiasm for talk, for the gregarious sharing of opinion that threatens to show one's "extreme individuality." The current on which his squeaking chair bobs grows more turgid. He says, "So much writing today seems a kind of spinoff from Beckett into some absurdity that thinks the world is a joke." He adds, perhaps the most dismissing thing he could say about a piece of writing, or a dinner conversation, or a trip to the store to buy an apple pie from a cousin of Billy Phelan, all of which, in William Kennedy's mind, are potentially and equally the stuff of fiction, the seed of myth: "I don't even take notes on half that stuff anymore." CAPTION: Picture, William Kennedy, Copyright (c) By Joyce Baronio