It depends on your membership level. If you're Upgraded or higher, I would suggest create new item -> book and each chapter becomes a new entry in the book.
If Basic, then you are more limited. As you are also limited in the amount of items in a portfolio, I would suggest creating a few static items, each with maybe 3 or 4 chapters, depending on the novel's length. I will say it is harder to get readers this way, though.
As for importing from Word, I do it all the time. But indents are not carried over, not is italicisation. For italics, you'll have to manually add them. For indents, I do a search for tab and replace with {indent} before I transfer, and that gives each paragraph an indent.
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