Hello. I put my picture book together in InDesign and redited in Sigil and saved it as .epub. I used Nook, Adobe Digitial Editions, and FB Reader to proof the final epub and then validated it at http://threepress.org/document/epub-validate
If you do not have electronic versions of the illustrations then they must be scanned. I don't think this BN service includes scanning images. In the very least, I believe it has to be sent in Word for them to convert to .epub.