🚀 go-pugleaf

>Then used save as and saved each fm file as a pdf. 

That's the problem. What you have to do is select the book file and
then File > Print Book (or ctrl+p). Then, when the Print window is
displayed, you must select the "Print Only to File" option and make
entry something like d:\MyFmDocs\* where the entry for the files is a
single asterisk (*) with no file specification. The exact path
required depends upon how you have the folders set up on your
computer.

The above produces a series of postscript files that can be distilled
to create interlinked PDFs. 

To automate creating PDFs in Distiller using Watched Folders, you need
to do the following:

In Distiller, select the Settings > Watched Folders... (or ctrl + f)
option. You will now see a window with a large blank area. Click on
the Add.. button. 

You will now see a "Browse for Folder" window. Select the folder that
you want to put your FM output into. Distiller will now create \In and
\Out folders in the folder that you selected. Using the example above
for  printing top file, you may now have d:\MyFMDocs\In and
d:\MyFmDocs\out folders. When you print from FM, specify the \In
folder (e.g. d:\MyFmDocs\In\*).

In the PostProcessing options you can set the "Postscript file is:"
option to "Deleted". You can also specify which of the Distiller job
options (Screen, Print, Press, etc.) is to be applied for jobs placed
in this folder. Note: you can setup different watched folders for the
different job options and then print to the appropriate one depending
upon whether your book is going to screen, print, etc.

The final PDFs will be placed in the \Out folder.

Note: you need to leave Distiller running as a background process for
this to work properly (otherwise it won't be watching the Watched
Folders, will it?).