Perhaps look at how completed diary-style books are formatted and copy. I'd think you could use a date and/or Dear Diary as a chapter titles and just format as a regular manuscript thereafter. If the illustration notes add something that isn't clear from the text, you'd include them in parenthesis at the end of a relevant section. Make sure everything in a note matters to the story. (For example, if you mention the color of a dress, that color should mean something and not be clear from context anywhere in the book---the illustrator will read the entire text before putting in spot illustrations and working on the cover, etc. )