You're missing anchor tags/an id attribute to show where the links go to.
Something along the lines of:
<h1><a name="ch1">Chapter One</a></h1>
or
<h1 id="ch1">Chapter One</h1>
should probably do it, if the TOC is auto-generated.
Mind you, I'm on a Mac and Mobipocket Creator doesn't work under Wine, so you'd probably get better and more useful responses by asking the mods to move this to E-book Formats/Mobi.
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