Work in wool, ingenious notion, the first time overlooked (7)
I believe the answer is:
crochet
'work' is the definition.
(I have seen 'Decorative work' mean 'crochet' so perhaps 'work' could also mean 'crochet')
'notion the first time overlooked' is the wordplay.
'notion' becomes 'crotchet' (I have seen 'perverse notion' mean 'crotchet' so perhaps 'notion' could also mean 'crotchet').
'the first time' becomes 't' (1st letter of 'time').
'overlooked' indicates named letters should be taken away.
'crotchet' with 't' taken out is 'CROCHET'.
'in wool ingenious' is the link.
This may not be correct. Some or all of it may be part of another bit of the clue.
Can you help me to learn more?
(Other definitions for crochet that I've seen before include "Decorative work using loops" , "Make using thread and hooked needle" , "piece of handiwork" , "Work yarn with hook" , "Genteel pastime" .)