If it is your intent to submit it to ICE/Guild Companion Publications then I wouldn't have thought you'd need to make it into a book layout yourself as that'd be something the layout designer would be doing if they picked it up. The same for the illustrations.
I'm not sure how they'd respond to another setting as there's several for ICE already including Shadow World. They may want to stick to the various settings they already have for the time being so as to not over extend themselves (baring in mind that the HARP SF also comes with a new setting).
If, however, you're going to self publish, then InDesign would be the one for you and as MarkC mentioned, the Adobe Classroom in a Book series are a great start but if you're starting form scratch, it's going to be a steep learning curve. I'm not sure if you can get PageMaker anymore as Adobe stopped development of that when they released InDesign. The current version of InDesign is CS5 but you certainly don't need the latest and you'll probably be able to get InDesign CS1 from Ebay quite cheaply. Quark Xpress is an alternative but I switched to InDesign early on and haven't looked back since!
Word is no good for professional print projects but I'm sure it's very good at editing the manuscript. Or Microsoft Publisher either but club newsletters and the like are it's target use (and although I use Macs, I'm not saying this because I'm anti-Microsoft). It's all about the language it speaks and we need Postscript for professional jobs which also drops OpenOffice as being a contender.
You mentioned that you've used HARP Fantasy races (and presumably HARP Stats too) but you may want to think about multi-stating - adding in RM2/Classic and RMSS/RMFRP stats into the mix as well. Extending that thought, so as not to restrict your audience, you could stat it for a variety of systems.
I would like to help but I'm somewhat busy currently with the layout of HARP SF Xtreme. I've finished the Shadow World Player's Guide illustrations and layout PDF, HARP SF layouts (and some supplementary illustrations). There's some reformatting for the Shadow World Player's Guide for the Print on Demand system next on the list. I'll then be working on the illustrations for the Shadow World section (and cover) of the Guild Adventurer which is followed by the Illustrations and layout for Emer 3.
It's going to be several months until I can directly help but I'm happy to give advice as you're going through InDesign if you like (my contact details are in my sig below).
Good luck!