First, a few remarks about your workflow
I always work with styles.
Inaccurate! You only work with paragraph styles. All your other formatting effects, such as underlining or colour change, are brought in with direct formatting, toolbar button or menu equivalent, instead of character styles. This is responsible for formatting burden when reviewing you document.
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Your chapter title uses two Heading 1 paragraphs: one for the number, one for the title.
If you generate a TOC, you’ll have 2 entries for the chapter. This is certainly not what you intend. Moreover, it means you cannot set Spacing Below paracraph to a value taking into account the height of your picture. You do that with empty Text Body paragraphs, which is similar to dreaded direct formatting.
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The picture wrapping parameters are not correctly set, leading you to space text with empty paragraphs (already cited).
Now the recommendations.
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Heading 1 on several lines
Use Shift+Return after your chapter number instead of Return. This inserts a manualline break, not a paragraph break, so that you have a single paragraph instead of 2. In the TOC, the line break is replaced by a space, so it does not harm.
Now you can set the Below paragraph spacing to a value caring for the picture height.
Side remark: instead of manually numbering your chapter , use Tools>Chapter numbering. As you intend to split your document and merge the files with a master document, this will allow to reorganise your s chapters and have the chapter number automatically updated to the correct sequential value.
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Picture settings
Pictures are inserted in a frame styled Graphics. If you only insert pictures as a flourish for your chapter titles, use this style; otherwise create a new one. It can be linked to Graphics if you want to share properties or be completely independent. Here are my recommended settings:
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Type, vertical position Top relative to Paragraph text area to align with top border of Heading 1 paragraph (unless you want white space above the title and not on the picture (in which case keep Margin and add spacing as Above paragraph to “center” your title viz. picture, but beware! you linked Heading 2 to Heading 1 so the former will inherit the latter spacings; it is better to unlink them).
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Wrap, instead of Optimal, use After; in Options, check First paragraph and remove your empty paragraphs used only to provide vertical spacing between your Heading 1 and your Heading 2; eventually add some Bottom spacing
If you keep your settings in a custom frame style, don’t forget to style the picture with a double-click on style name after you’ve selected the picture.
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Paragraph styles
Learn how to use efficiently paragraph styles. Your lists are manually made (you either used a toolbar button or you numbered them yourself). Use paragraph styles intended for lists (though they need an initial configuration step to attach them to a counter, so called list style).
Don’t hesitate to “mark up” your text with paragraph styles to indicate the “semantics” of the paragraph. You only use Text Body and Quotations. Good start. But similar paragraphs like “NOTEBOOK TASK 1” and “NOTEBOOK TASK 2” are inconsistently styled as Text Body and Heading 2 (the latter with underline direct formatting). If they have a dedicated identical role in your book structure, they should be styled with the same dedicated paragraph style.
For instance, I question your use of Heading 3. Is "Think positive* really a heading intended to find its place in a TOC? If answer is no, give it another style such as Important , Advice , Behaviour or Improvement.
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Character styles
I selected all your text with Ctrl+A and applied Formet>Clear direct formatting (Ctrl+M) all your stylistic variations (bold, unserline, colour, …) vanished.
Learn to use character styles. They also participate in “semantic mark up”. The interest is the possibility to alter the visual appearance from a single spot and it guarantees formatting consistency across the whole text.
If you write similar documents, or separate chapters in several files, save your settings in a template. Changes to the template styles will be automatically transferred to the documents next time you open them.
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(edited to correct typos and misspellings)
