I don't know whether this is causing the problem, but I don't see any paragraph breaks, just hard line breaks. Also I don't recognise the tag </br>.
As far as I know the correct tag for linebreak in XHTML is <br />. It doesn't have a matching closing tag.
Try opening the HTML file in a good text editor and replace
Code:
every instance of <br class="calibre1"> with <p class="calibre1">
every instance of </br> with </p>
Then import the new HTML into calibre and try converting that.
If that is no better PM me with your email address and we can take it from there.
Edit: Oh and make sure you put the edited HTML file in the same folder as the unedited one so that it has access to the correct CSS file and any images when you import to Calibre.