Instruments enhance the effect of songs played with them, that use that instrument type. For example, Selo's is a percussion song. If played while holding a drum, you will run faster than if you were not. The exact amount of the increase depends on a couple things:
(1) The instrument mod. You'll notice on intruments it says something like "Percussion 18". That's the modifier. To get the final results, you'd do something like (base movement increase)x1.8 = modified movement increase. Simply put, higher mods are better.
(2) The song. Some songs have caps on how high their effect can go. Some restrict certain effects (a lute will enhance the hp regen effect of songs, but not the mana regen effect of the same song). Finally, some are jusy irrational (you won't be able to breath "more" water by using a flute with the enduring breath song).
I'd have a hell of a time explaining bards from the ground up, but you're welcome to ask specific questions. For a website,
EQ Diva is a great beginner's bard resource.