[RPG] Melee Combat in Moldvay’s D&D Basic

Here's my take on the situation you have described:

Readied Actions are meant for use in Initiative Order only.

Quote from Wizard's FAQ @ their community forum:

On your turn, you spend a standard action to ready an action. You then choose a target (if applicable), a triggering circumstance, and a specific action to ready. When/if the trigger action takes place, and it's legal for you to perform the action, you perform the action as an immediate reaction to the trigger action. Then you change your place in the initiative order so that you take your turn before the creature who triggered your readied action.

Your PCs cannot get around rolling Initiative just by saying "I'm going to attack the nearest hostile I see." Generally that's what everyone is going to do in combat, hence why we roll for Initiative. If you allow these out of combat Readied Actions, your PCs will always have readied actions like that set up and it will severely impact how your encounters will need to be designed from now on.

So, you cannot ready an action outside of combat. That fact should simplify much of issue you are dealing with.

Quick notes on Readied Actions: A Readied Action is an Immediate Reaction. It is not an Immediate Interrupt, so the enemy gets to complete its Triggering Action before the Readied Action happens. Also, when you change your position on the Initiative Order due to a Readied Action you can wind up in a higher position than you initially rolled.

On surprise:

It is possible to be surprised even when you are expecting a fight. Your PCs (especially that Rogue or Assassin) would want a chance to sneak up on an alert/ready to fight band of enemies, wouldn't they? The monsters get that same consideration. That's why we have the Perception skill and the Stealth skill.

Retreat is for when you all need to run!

Fighting withdrawal is always better for disengaging from combat, if it will actually do the job. A withdrawal only works if the opponent is unable or unwilling to follow to maintain the combat engagement – if they do, you've wasted a turn failing to disengage.

The other purpose of a withdrawal is to back into a more favourable position – into a doorway or narrow hallway, for example. However, if that choke point is beyond ½ your movement, then you have a dilemma – a fighting withdrawal won't get you there in one turn. If time is of the essence, do you try to do it in two turns of withdrawal, or do you break engagement to flee to the superior position and risk a strike at your back?

The difference between them is always that, sometimes, those few feet of difference can be worth the risk. If they're not, then a Retreat action isn't worth considering.

And yes, the monster gets its attack. Turn order is merely a game convenience for play simplicity, and for representing a slight combat advantage, but really every attack (by creatures that survive the whole turn) are considered part of a simultaneous mêlèe. The retreat grants that extra attack – as GM you can roll it at the time of retreat, or on its initiative turn, and the difference is a matter if convenience rather than whether the target is still viable. Think of it as happening "sometime" during the turn when the retreating character exposed themself to danger by recklessly turning tail, but do the actual roll and damage whenever is most convenient.