I've spent many hours in the past two days attempting to get a word doc in shape to be turned into an epub. This was for my box set project that I've been meaning to do for a year; I was combining three novels and a novella and removing various pleas for reviews and newsletter sign-ups.
Of course the very first thing I learned is that my References section (Word 2010) doesn't have a Custom TOC setting. I consulted a formatting course I took in 2014, when Word 2010 was reasonably new. Same directions you have, and nope, what I have access to is not the same. This always happens.
I think I've wrestled the file into shape, but adding up the hours involved I have to say that the only rewarding part of the effort was the opportunity to make some edits to the texts. Otherwise, for me, paying someone else to format it is the logical way to go. I do like having closer control of the text, of course. I corrected some spelling errors of proper names and fixed a few punctuation mistakes and even got rid of a word that put the lie to what that character says and does in another book. But was it worth my time? I doubt it. As with a lot of DIY efforts, all the learning is in the first job, and there may not be a second one soon enough to remember what was learned.
Sigil is great for handling some TOCs. As long as each chapter is its own file, the navigational TOC will take care of itself. You can even move pages around, you might have to change some files, the epub-checker plugin will tell you just what file and line needs to be fixed. (In my latest project, I accidentally moved a file, and the checker said the nav list was out of order. I could have either changed the nav list or moved the file back where it belonged to fix the problem.) Seriously, for a free software, it's above and beyond what you'd expect. I believe they also have a WYSIWIG editor that works with Sigil. You put your content in the editor (not sure how it works, haven't tested it out)and it produces nicely coded files for Sigil.
https://sigil-ebook.com/Using word to create an epub is sort of like using a screwdriver to hammer in a nail. Sure, you can make it work, but it's not always going to produce best results. The key to a good epub is the CSS (and not an inline CSS), styles, and individual files. With properly assigned styles, individual files per TOC entry, and a clean CSS, updating books is almost too easy. Open up the epub in Sigil, open up the file where the change needs to be made, make the change, save the file, and re-upload. Only downside is that the change isn't made on the source doc. (My workflow includes making changes in the source doc, highlighting said change, then making the change in the epub - one extra step, but overall not that big of a deal in the long run.)
Making the jump from Word to epub might be intimidating at first, but you're going to have a lot fewer problems in the future. Or, you can hire someone to do all the formatting for you. And the good news is that you'll have an epub you can open up in Sigil and make any changes/updates to without having to reformat the whole book.