First of all, for captures, the PrintScreen key on your keyboard works just fine. You can then paste from the clipboard to an image editor (even something like Paint, which should be already on your system, under Accessories.)
Save as bitmap, then use a program to convert to gif. You use gif for graphics, and jpg for pictures taken with a camera (you used the wrong format, that's why your pictures are blurry.)
There are plenty of programs that can convert image formats. Go to www.download.com and type 'gif convert' or some other relevant keywords in the search box and pick the smallest program. BMPToGif works just fine.
PrintScreen will capture the entire screen, you need to select a part of it, copy and paste into a separate bmp file, you can do that using Paint.
If you want to try out the above mentioned Paint Shop Pro, you can get it at download.com as well (it's shareware.)
Browse either download.com or tucows.com (the latter has less programs but mostly only quality stuff) for other utilities and shareware/freeware programs you might find useful.
You might find some shareware wysiwyg program for creating web pages. The page you made with word (not a very good tool for that purpose) is anything but simple, and uses xml and a vml add on just to see the graphics.
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