Narrowed the culprit down:
Code:
<h2 class="head"><a class="calibre14" href="../Text/toc.html#filepos650277"><span class="calibre5">C</span><span class="calibre6">HAPTER</span><span class="calibre5">1</span></a></h2>
converts as I want it to. (I removed space after 'chapter')
Why won't the conversion accept empty space? Never had a problem with that before.