Firstly, to be quite brutal, the fact that you ask about what Tools to use (directory submission software etc) suggests to me that you maybe aren't yet proficient enough to undertake this task as a wage earning activity. I specialise in SEO and use very little software for anything appart from Word, Excell, Weblog Expert and Google online Tools.
Now to be a bit more constructive, there are rank checkers that use APIs and therefore offer less risk of offending Google etc TOS. Advanced Web Ranking has good words written about it. Keyword Research can be done using Google Keyword Suggestion Tool which works very well. Auto Directory Submission (IMHO) should be avoided. There is no substitute for doing this mandraulically for numerous reasons.
As for obtaining Clients, research a Market Sector that you have a good understanding of. Then use SEs to find underachieving sites for Relevant and potentially productive Search Phrases. Then make a pitch to improve their SE rankings. DON'T get suckered into making firm guarantees, use phrases such as significantly improve etc.
You may also need to consider doing a few freebies or cut price SEO jobs to get the references/testimonials if you can't come up with any already.
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