This >> http://www.lulu.com/shop/kevin-lomas/steam-vehicles-of-the-road/paperback/product-21260214.html
was created in Word. (The photos are many decades old and the Preview lo-res, so don't let what they look like put you off!) Make sure your images are the correct size for where you want to paste them to in Word, before you paste them. Word 10 can Save As a PDF, and that is what I usually do.
When using Save As, the PDF Options settings that I know will work with Lulu's print book wizards (and Lulu's PDF e-book Wizard) are, Page Range - all: Publish What - Document: Include non-printing information - I only have Document structure tags for accessibility ticked there (not that I know what that means! But I used the same file for a PDF e-Book): PDF Options - ISO 19005-1 compliant (PDF/A)