Hi Jess,
When I write my stories in word, I single space them, with a double space between paragraphs. With this formatting, the paragraphs will be preserved when you upload to LJ.
In LJ, you have the option to upload in HTML mode or Rich Text. In rich text, you will get icons that allow you to add italics, bold, etc. You do your formatting at the time you upload your document.
Alternatively (and this is what I do), put the HTML tags in your word document as you are writing. <i > to start italics; < /i> to end. <b > </b > for bold, <center> </center> to center, etc. Don't put the spaces in the brackets...I had to do that to make them show here.
As for the fancy pages, you can select those in your profile in LJ.
I am not real good on the tags, etc. Maybe someone else can chime in with that info. There are also lots of help files and FAQs which are full of information.
Hope this helps. Good luck!
Leslie