Samson Raphaelson, the screenwriter for this movie, says that Lubitsch brought him the play one day in 1938 and suggested that he write a screenplay based on it. At the time, Lubitsch was unaffiliated with any studio. Lubitsch had just left Paramount and was contemplating producing the film with private capital. Raphaelson accepted the commission. Later on, Lubitsch signed a two picture deal with MGM, for this and Ninotchka. So my speculation about this script being found by the MGM studio readers is incorrect. [See the trivia section for an item consistent with Raphaelson's recollection.]
As for how much of the play made it into the screenplay, Raphaelson says this:
The solid Laszlo opus flowered into a brand new screenplay; it begot the music box and its ramifications, the crusty, scolding, and later touching and sad Frank Morgan, the rambunctious Pepi, the inspired cravenness of Pirovitch, and the scenes between Stewart and Sullavan were all newborn, notably those in the cafe, in her little room, and the last ones in the shop.
I found this sentence a little confusing but rereading it, he seems to be saying that all of those things were additions to the play.
Source: Three Screen Comedies by Samson Raphaelson. Author's note to the Shop Around the Corner screenplay.
I'd also like to point out that Laszlo was not the only Hungarian playwright whose work showed up in Hollywood films - Ferenc Molnar's plays were the source of several films, including another starring Margaret Sullavan - the Good Fairy
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