Compose your document in OpenOffice.org Writer. That is a free office suite very competitive with the paid Microsucks Office suite. You can save the document in OpenOffice.org document format You can even save it in Microsoft Word format, but why anyone would do that escapes me.
Next, OpenOffice.org has graphics and presentation modules (Draw and Impress). With one of those you can make an illustrated cover as a separate file.
Then, in Open Office Write, you can combine the two and export as a .pdf file. That pdf file is your e-book, which you can upload to a website or send as an e-mail attachment.