Allowing for the conception of future THz indoor communication systems, a simulation environment combining an accurate ray tracing propagation model as well as a physical layer simulator is introduced. Frequency domain ray tracing is demonstrated for a wireless LAN setup in an indoor environment at frequencies from 300 to 350 GHz. On the basis of the results, arising challenges of such ultra broadband communication channels as well as specialties with respect to system simulations are illustrated. Exemplary system simulations employing the realistic ray tracing channel are performed to assess system aspects such as coding schemes, antenna types and phase noise requirements.