The story I heard was that the song came to John Phillips as he was waking up in a cheap NYC hotel next to Michelle. It was in the pre-dawn hours. He woke her up, asked her to write down what he sang, and said "this is going to make us rich." I don't think her contribution went beyond transcribing the words, I don't know if she also wrote down the music (I doubt it).
I saw an interview with Paul McCartney in which he was asked "how did you manage to make your songs so catchy?" He answered "we didn't have a tape recorder back then, the songs had to be catchy, or we'd forget them." Maybe that's how Phillips remembered the music.
I liked I Saw Her Again Last Night as much as I liked California Dreamin'. It came out six months later, in June 1966.
When I lived in a cold foreign country, it meant a lot to me.