You'll need to upload your story as a file in rich text format (.rtf). You can write it using Word or Open Office and save it in that format, and it will preserve bold and italic text.
There's a short article in the writer's resource area that explains how to add the tags. I use it for italics and indenting. Very easy to do. Just copy your tagged story in the lit editor. Hitting preview, you can see exactly how your story will look when published. IIRC, stories are posted quicker using their editor as they don't have to add the tags, like they do for submitted files. I think the article is titled "Bold or Italic" in the How to section.