The code you're looking for is in CreateNewBlock.

The usual way transactions are added to a block is by sorting by priority. The priority of an input is the value being spent in the input multiplied by the number of confirmations it has. The priority of a transaction is the sum of all the priorities of the inputs. See this line:

dPriority += (double)nValueIn * nConf;

Transactions are added to a vector of transaction priority:

vector<TxPriority> vecPriority;

Then they are sorted according to their priority:

TxPriorityCompare comparer(fSortedByFee);
std::make_heap(vecPriority.begin(), vecPriority.end(), comparer);

And one by one, transactions are verified to be valid and then added to the block, done by order of priority, higher priority first.:

while (!vecPriority.empty())
...
// Added
pblock->vtx.push_back(tx);