When I fixed up the formatting, I also fixed up the ToC in the NCX.
I also made sure the files were properly named as well. I use Sigil to split, rename & fix the ToC. Works very well.
I've removed paragraph spaces and put in indents. It looks so much better and so much easier to read. Paragraph spaces take one out of the story as instead of going from words to words, you go from words to space to words in every paragraph. It is OK to go from words to space to words for a section break. But otherwise, nope.