Hi To add to the above responses which I also agree with. To answer your direct question in the situation ( context) you have put the pen you're referring to, you'd use number 1. This is because you are writing a letter, and the pen you are using is great/ smooth = it writes well. However, if this pen suddenly stopped working and you have a few others with a tiny bit of ink in possibly not enough to finish your letter, then your room mate says " is your pen OK, can you finish the letter or do you still need another one?" You'd then say " this pen is fine, it's writing well there's enough ink". So it is all about context ( situation) with this sentence, neither are wrong- good job!

You can use either one. The first one means that generally speaking the pen you are using writes well. The second one is a temporary state of being. You can use it while you are actually writing. This pen writes well (every time I use it) This pen is writing well (sometimes maybe it doesn't)

I think the first one is correct as it is the fact that the pen works well. The second one isn't correct because it conveys the idea of a temporary action at a certain time ,not all the time.