Okay meclone2, that's something we can work with.
First off the third point of action, distributing the newsletter is officially solved, as you already have a mailing list up and running. That's good because this solves one major problem
Now point 1 (gathering content) and point 2 (creating the newsletter) may - and in all likelihood will - interfere with each other. This means that based on some major decisions you may need to adapt on both accounts. Let me explain: the goal should be to take as little time as needed for you to create this newsletter but also as little knowledge as possible for each single writer while still reaching your goals.
The thing is, having a publishing software (like MS Publisher, Adobe Pagemaker or even free software like the mentioned RagTime) usually requires a certain amount of time to get to know the software and to get the results you desire. While it may be beneficial for the professional use if every author already submits his or her contents in the desired output-format, this can take a lot out of your volunteers.
My suggestion would be to simply use direct mail for distributing content in whichever format may be best for you creating the newsletter.
Now on to your hard work
Being an editor, not of one text but of a complete newsletter, is a hard task. Without a doubt you will have the last shot at proofreading all contents, you need to decide what and how much of a topic is warranted for the newsletter and as this is a one (wo?)man job there's the whole technical hardship you need to learn.
You already mentioned the newsletter only being kind of a "linklist" to the website like newspapers/magazines handle this. This would indeed be a good way: by placing a headline with a few descriptive words and a link to the full-text version of a story, you get to place more content in less space. This way, a reader doesn't have to scroll for pages over boring content (a big plus, believe me) but can take a first look at all you have to offer. On the other hand, this also requires a certain backend on a website. Do you have this kind of webspace available, preferably with some script language available? The most economic way would be using a CMS (content management system); after setting it up, the task'd be reduced to adding a new article/page and then either importing data from a file or using a textarea with (format)features like offered by Microsoft Word.
That was probably a bit too specific again, sorry
The thing is, that without some reasonable amount of time (and probably also money or at least effort, because using the right tools isn't always free) on your and the writer's part, most "professional" options are out of the picture. BUT this does not mean, that you cannot publish a professional looking newsletter and I think, this is more important than doing each step as it'd be done in business.
By using a website which is mainly being linked to, you can forget about worrying yourself about creating the perfect newsletter. Instead you require some basic knowledge on using a webbased interface and you should know how to work with a HTML-editor (like Dreamweaver).
You will also be offered many more features which may not be needed at all (ie a place to exchange yourselves in some kind of forum, which is obviously not needed if you've got a mailinglist; also this would offer a great platform for people outside your community/mailinglist).
