was it ever legal to use 3 wire cable to operate two circuits one neutral 120 volts?
I think you are referring to a shared neutral/multi-wire branch circuit.  These are commonly found in kitchens.  They were and still are to code in many areas, but typically I believe their use is limited to kitchens.

You should run a new cable back to the breaker box.  If you were to run an independent cable then it is possible for it to break independently of the rest of the cable, which would leave you with an open neutral which can cause all sorts of problems.  Unless your cable branches from another box, you cannot just run a neutral from one box while the hot comes from another circuit. You have to run a new direct wire anyways, so why not just pull a new cable - it's just as much work as pulling a single wire.

If you do opt to keep the multi-wire branch, the breaker should be tied together so that there is not the possibility of one half being off and the other on (a possibly dangerous scenario if someone assumed the power was cut because one of the circuits did not test live). Likewise, if it trips because of a short, there is a good chance the other hot is close by and you want the second breaker to trip too.