This article presents a comprehensive design procedure for isolated microgrids with a high penetration of nonlinear loads. The proposed microgrid planning approach simultaneously determines the sizes, locations and types of distributed generators (DGs) and shunt capacitor banks (CBs). The presence of nonlinear loads along with the capacitors of CBs or DGs' output filters may cause severe voltage distortions. To consider this issue, a harmonic power flow tool tailored for planning applications is developed that takes into account the specific features of isolated microgrids. Given the necessity of supply continuity for isolated microgrids after a contingency, the proposed planning approach takes into consideration the reliability to increase the probability of building successful islands. Unlike previous methods, the proposed approach does not rely merely on supply adequacy, and takes into account the fact that the voltage provision requirement can only be fulfilled through dispatchable DGs. The intermittent natures of loads and renewable DGs are modelled probabilistically. The effectiveness of the proposed planning approach has been validated using the PG&E 69-bus system, and the followings are observed: 1) the significance of applying suitable fundamental-power-flow and harmonic-power-flow algorithms for isolated microgrids, and 2) the possibility of avoiding a severe voltage distortion by utilizing an appropriate planning method and only small increase in the cost.