Word may not be "the best program for this type of activity" (you can start
a lot of arguments about that), but it's the one you have, and it's
certainly capable of handling most ordinary books. You'll need to educate
yourself a lot, though, if you want to achieve satisfactory results. Start
by boning up on the different kinds of headers. You can have up to three in
any given section (First Page Header, Even Page Header, Odd Page Header) by
checking both "Different first page" and "Different odd and even" on the
Layout tab of Page Setup. The easiest way to get the chapter number and
title in the header (without having to change it for every chapter) is to
use a StyleRef field to pick up the text in the most recent paragraph in the
Chapter Number or Chapter Title style (or whatever styles you may use for
these entities).

You will definitely want to use styles; you'll go crazy otherwise. So have a
look at http://www.mvps.org/word/FAQs/Customization/CreateATemplatePart2.htm

--
Suzanne S. Barnhill
Microsoft MVP (Word)