What is the OP's experience in using InDesign? To me this doesn't seem so complicated UNTIL the print booklet bit, so I'll give the run-down until then.
first, i'd set up a 16pp document 120mm high x 175mm high with facing pages AND master text frame turned on and set appropriate margins (this is up to the OP).
from here, either type or go to the file menu and go place to get a dialog box to place the text (from a word document) into the indesign file.
once the booklet has been made, it is using the "print booklet" bit that is a bit tougher. indesign CS5.5 has a print booklet feature and it involves some trial and error using the dialog boxes to get it right, but there is a preview which gives some idea if things are going in the right direction. BUT this will print direct to a printer – it isn't possible using Lion to use the print booklet feature to make a PDF (AFAIK).
one question for the OP though, is the OP printing the art on their own equipment, or sending it to a third party to be printed? if the latter is the case, it is not normally necessary to prepare imposed artwork for commercial printers – imposition is THEIR job as only they will know how they will want the artwork imposed. I say this having been a prepress operator for the last 15 years.