If you're usng Mobipocket Creator to create the book, you can type and edit the text using HTML.
You can do that manually, by inserting tags to indicating the markup; e.g
Code:
this is <b>bold</b>
Or you can use of the many WYSIWYG HTML editors (some of which are free).
For a typical work of fiction, there probably won't be a lot of markup, so doing it by hand shouldn't be too difficult.