Dear Peggy,
Thank you for making me welcome to Apple Discussions.
You're right, of course, about the layout options in the print dialog not putting the pages in the correct order for folding into a booklet. In my PC-days, I ordered my (one-sided) printer to print the pages, two to a sheet, in the appropriate order (8,1,6,3 for one side of the paper, and 2,7,4,5 for the other side) for an 8-page folder, and similarly for larger folders.
I planned to use the same approach (well, the same work-around) on the iMac, but had a hard time finding how to print two pages to a sheet. And one advantage of the approach was that page numbering could be done as required, with pages, not sheets, being numbered appropriately (that is, if Word did not omit the first digit for pages with two-digit numbers -- or, now that we're at it, if Word did not elaborate the "page X of Y" instruction as if it said "page X of X").
I have downloaded CocoaBooklet, at your kind suggestion, but haven't had time to try it out as yet.