I'm making an epub out of several short stories.
Kovid helped me get the TOC how I wanted it looking i.e.

Title of Story
Chapter
Title of Story

which is showing up great in Calibre reader.

On my Hanlin and the desktop fbreader only the title of the last story is showing (it used to be only the last chapter of the last story).

Is this a limitation in fbreader?

See Does any device support multi-level TOC's? (http://www.mobileread.com/forums/showpost.php?p=618492&postcount=15) for an example that works as expected in Windows FBReader and OpenInkPot. It's nested TOC is in toc.ncx, for example: <navPoint id="708e5056-e9a3-409c-9377-d3f1b00015f1" playOrder="24">
<navLabel>
<text>Genesis Dawn</text>
</navLabel>
<content src="The_Example_split_24.html"/>
<navPoint id="c5b218bb-9241-4994-8905-2c97143cb702" playOrder="25">
<navLabel>
<text>Chapter 21</text>
</navLabel>
<content src="The_Example_split_25.html"/>
</navPoint>
<navPoint id="564c81ab-ccd9-46e1-bffb-5f8abd7c7323" playOrder="26">
<navLabel>
<text>Chapter 22</text>
</navLabel>
<content src="The_Example_split_26.html"/>
</navPoint>
</navPoint>
Where "Genesis Dawn" is at level 1 and contains Chapters 21 and 22 at level 2.

This example seems to have been generated with Calibre, so I'm not sure what is wrong in your case.

The only thing I can see (bearing in mind I know nothing about html or xhtml) is that on all of mine "playOrder=0", but that includes the one that's showing.

The only thing I can see (bearing in mind I know nothing about html or xhtml) is that on all of mine "playOrder=0", but that includes the one that's showing. See Jellby's post in Creating table of contents (TOC) (http://www.mobileread.com/forums/showpost.php?p=588604&postcount=9). The "playOrder=0" entries are wrong, and this seems to be a Calibre bug (although I am not sure what a "SMIL time container" is, and this might allow some playOrder's to be the same).

I extracted the TOC and changed all the playorders and put it back and it works. Thanks