Jerry,First time out things can seem daunting and we've all been there. Your right about all of the files needing to be in the Source folder (no sub folders allowed).
There isn't a whole lot of difference between creating an ebook and a web site. Just like a web site you need to have an index.htm page--that's you're home page.
How the files get to the Source folder really doesn't matter. It's usually easiest to just copy the needed files to the Source folder. What is important is that the pages are HTM or HTML.
Unfortunately, Word likes to add a lot of garbage code when the .doc file is saved as an HTM or HTML page. You can easily edit the htm/l file using Window's Notebook program. You just want to be sure that when you save the file it is saved as htm or html and not as a text (.txt) file, which is Notebook's default file type.
If you think in terms of building a web site you'll do fine.
As for the Getting Stated section in the Help menu. After opening the Activ compiler and clicking Help on the menu bar and selecting the Getting Started tab, you'll find what you need listed in the yellow rectangle on the left of the page.