Aha. I found the solution to the image problem in this thread here.
Anyway, as HarryT's instructions note, images can
be put into a BD file by drag-and-drop - I've just tested it now, and it works fine.
I'm still none the wiser as to where my files in progress are being saved. I actually don't think they're being saved anywhere, to be honest. I've created a "BD" folder inside my "Book Designer 4.0" folder, but to no avail. Out of interest, when saving, I should only have to click on the "save" icon for the file to be saved in this "BD" folder, right?
I can't use "Save as..." as a workaround, either, because that doesn't let me choose .html0 as a file format to save in.
I'd appreciate any help anyone can provide on this on, to be honest!