Microsoft Word's .doc files are not directly supported by storiesonline's submission wizard. So you must convert them into an acceptable format. MS Word is capable of saving files in multiple formats some of which are acceptable on storiesonline.
Two file formats are supported on storiesonline: HTML files (or Web Pages in MS Word lingo), and plain text files. MS word is capable of saving in both of these formats. If your text contains italics and bolding that you would like to have it show up that way on storiesonline, then you need the HTML (web page) format.
Saving as HTML from MS Word is a simple five-step procedure:
Open your story file in MS Word.
Click on the File menu:

Select 'Save As...':

In the 'Save As...' dialog box, from the 'Save as type' menu select 'Web Page, Filtered':
If the 'Web Page, filtered' option is not available for some reason, you can use the 'Web Page' option, but that produces extremely large files that take much longer to attach AND those files may contain private bits of information that you may not want to send out.

Add something to the file name to be able to distinguish it from the original, something like '_html':

When asked to confirm, click 'Yes':

After the above steps, you'll have an HTML file that you can attach to your submission in the site's submission wizard.
The site's submission wizard converts html files into text files upon receipt. This conversion process requires that HTML files conform to a minimum set of standards in order to get proper results. For auto-generated html files like the ones resulting from the above process where MS Word generates the html code, nothing needs to be done.
However, for authors crafting their own html code and submitting it, they need to make sure of few things:
The file must be a fairly valid html file:
Formatting:
The converter supports very specific tags and strips everything else. If you want your stories to show up on the site the way you want them (within the narrow specifications of the supported tags), then you must use the supported tags.
To submit stories or chapters with images, you need to submit the story's text and the images to go with it. You can do this two different ways:

To make this work, your text must contain pointers to where the images go in the text.
If you're submitting an html files with <img > tags in it, then you're done.
If you're submitting plain text, then you need to include something to give the moderators a hint where the images should be. For example:
Chapter 2
[[[ image IMG_001.jpg goes here centered ]]]
Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Praesent aliquam, justo convallis luctus rutrum, erat nulla fermentum diam, at nonummy quam ante ac quam. Maecenas urna purus, fermentum id, molestie in, commodo porttitor, felis. Nam blandit quam ut lacus. Quisque ornare risus quis ligula. Phasellus tristique purus a augue condimentum adipiscing. Aenean sagittis. Etiam leo pede, rhoncus venenatis, tristique in, vulputate at, odio. Donec et ipsum et sapien vehicula nonummy. Suspendisse potenti. Fusce varius urna id quam. Sed neque mi, varius eget, tincidunt nec, suscipit id, libero. In eget purus. Vestibulum ut nisl. Donec eu mi sed turpis feugiat feugiat. Integer turpis arcu, pellentesque eget, cursus et, fermentum ut, sapien. Fusce metus mi, eleifend sollicitudin, molestie id, varius et, nibh. Donec nec libero.
[[[ image peoplehavingsex001.jpg goes here on the right ]]]
Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Praesent aliquam, justo convallis luctus rutrum, erat nulla fermentum diam, at nonummy quam ante ac quam. Maecenas urna purus, fermentum id, molestie in, commodo porttitor, felis. Nam blandit quam ut lacus. Quisque ornare risus quis ligula. Phasellus tristique purus a augue condimentum adipiscing. Aenean sagittis. Etiam leo pede, rhoncus venenatis, tristique in, vulputate at, odio. Donec et ipsum et sapien vehicula nonummy. Suspendisse potenti. Fusce varius urna id quam. Sed neque mi, varius eget, tincidunt nec, suscipit id, libero. In eget purus. Vestibulum ut nisl. Donec eu mi sed turpis feugiat feugiat. Integer turpis arcu, pellentesque eget, cursus et, fermentum ut, sapien. Fusce metus mi, eleifend sollicitudin, molestie id, varius et, nibh. Donec nec libero.
Whenever you submit text with images, leave a note in the moderators' notes field in the wizard, pointing out that you're including images and how your image locations are pointed out, so that the moderator knows what to look for in your text to include your images.
Please note that, due to bandwidth limitations, images are treated at the discretion of the moderator. If the images don't add anything to the story and are just gratuitus, then they may get removed. If they are too large then they will be scaled/re-compressed down to a more reasonable/acceptable size.
Restrictions: for images to be included in stories they must meet certain standards:
To get the best results while submitting stories/chapters to the site, there are few things that you can do:
My Story's Title
by Author name
Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Praesent aliquam, justo convallis luctus rutrum, erat nulla fermentum diam, at nonummy quam ante ac quam. Maecenas urna purus, fermentum id, molestie in, commodo porttitor, felis. Nam blandit quam ut lacus. Quisque ornare risus quis ligula. Phasellus tristique purus a augue condimentum adipiscing. Aenean sagittis. Etiam leo pede, rhoncus venenatis, tristique in, vulputate at, odio.
Donec et ipsum et sapien vehicula nonummy. Suspendisse potenti. Fusce varius urna id quam. Sed neque mi, varius eget, tincidunt nec, suscipit id, libero. In eget purus. Vestibulum ut nisl. Donec eu mi sed turpis feugiat feugiat. Integer turpis arcu, pellentesque eget, cursus et, fermentum ut, sapien. Fusce metus mi, eleifend sollicitudin, molestie id, varius et, nibh. Donec nec libero.
My Story's Title
by Author name
Author's Note: Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Praesent aliquam, justo convallis luctus rutrum, erat nulla fermentum diam, at nonummy quam ante ac quam. Maecenas urna purus, fermentum id, molestie in, commodo porttitor, felis.
Chapter 1
Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Praesent aliquam, justo convallis luctus rutrum, erat nulla fermentum diam, at nonummy quam ante ac quam. Maecenas urna purus, fermentum id, molestie in, commodo porttitor, felis.
Donec et ipsum et sapien vehicula nonummy. Suspendisse potenti. Fusce varius urna id quam. Sed neque mi, varius eget, tincidunt nec, suscipit id, libero.
Chapter 2: Chapter title
Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Praesent aliquam, justo convallis luctus rutrum, erat nulla fermentum diam, at nonummy quam ante ac quam. Maecenas urna purus, fermentum id, molestie in, commodo porttitor, felis.
Donec et ipsum et sapien vehicula nonummy. Suspendisse potenti. Fusce varius urna id quam. Sed neque mi, varius eget, tincidunt nec, suscipit id, libero.
My Story's Title
by Author name
Chapter 2
Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Praesent aliquam, justo convallis luctus rutrum, erat nulla fermentum diam, at nonummy quam ante ac quam. Maecenas urna purus, fermentum id, molestie in, commodo porttitor, felis.
Donec et ipsum et sapien vehicula nonummy. Suspendisse potenti. Fusce varius urna id quam. Sed neque mi, varius eget, tincidunt nec, suscipit id, libero.