So I'm early on, (rank 2 I believe), I now have him standing in the hallway at school with the option to hang out with him.
However the game informs me 2 things before I can say yes to hanging out with him: 1. I have a certain Magician persona which would help further with his S. Link. But then it goes on to say:
2. It doesn't look like I can improve my relationship with him right now.
Then it asks if I want to hang out with him.
So, should I work work on leveling the S. Link (even if it doesn't rank up, I"m still earning points towards), or is that the game just telling me to not even bother right now. I don't want to waste in game time hanging with someone if it appears I'll gain no benefit at all.
Basically when it says that it means it won't rank up on the visit, but it will earn you points towards ranking it up. So the short answer is yes, you should still hang out with them. --- Emperor Kanji Approved™ Smashtastic Swag Style http://i.imgur.com/5E48Z.png
You can leave people at school alone at times since questions in class/test results etc can improve your relationship. Making lunch and eating it with them as well. Although you probably won't max every link on the first play through anyway unless you get really lucky or know the game inside out.
It's impossible to truly waste time since you'll still be building points towards the next rank, but it's generally best to prioritize doing any daytime s.links that are ready to rank up instead of just hanging out. You can make up the needed points via tests, making lunch, or spending time with them at night either through talking to them or using the fortune box at the shrine(the latter is incredibly useful, don't ignore it!)
The big exceptions are as follows:
1. You want a quicker rank up for gameplay purposes. All the party members get extra stuff for leveling their s.link, and some of them are very useful to get as soon as possible. Rise especially has some crazy bonuses. Yukiko with Amirita early on is great too.
2. You're near a deadline on an s.link, and fortune box by itself won't cut it in getting the points you need. This is really only applicable to a few s.links: Jester needs to be at 6 before November, Aeon needs to be at 10 before you beat the December boss, and (I think this was changed, not sure, haven't bothered testing) Justice/Heiro should be maxed before November as well.