Glue sticks (Ross, Uhu, etc) work fine for attaching labels. Just make sure your bottles are dry and unchilled when gluing. The labels and glue come off easily with a little hot water.
Even without software, you can insert downloaded, scanned, or digital camera pictures into an excel worksheet and jazz it up with wordart. I still make maybe half my labels that way. Also, there are tons of free font websites out there.
Copy the finished label to make an array of a dozen or so on a page. Then print at home, or take a disk to your local Officemax or whatever. Cut apart with an Xacto and a metal straightedge.