I don't know when you're supposed to do it, but I usually harvest in the fall. I wash them, peel them, and grate very fine. I've played around with timing on when to add the vinegar, I've read that three minutes will give you peak heat, but since it takes way more than three minutes for me to grate the whole root that doesn't really work out. Anyway, I never simmer it at all - I just add some vinegar and salt to taste, then stick it in the fridge. No sour cream or anything else mixed into mine.
Fresh prepared horseradish is awesome on roast beef!