I second charleski's point: use Sigil.
1. Download Sigil to your computer.
http://code.google.com/p/sigil/
2. Open your original HTML file in Sigil.
3. Break the opened file into logical chapters.
4. Give each chapter a name and those names heading designations (h1 or h2 for example).
5. Save as .epub.
6. Check out your Table of Contents in Sigil (Tools/TOC Editor...).
7. Validate your ePub file. It should pass easily.
8. View your new ePub file in any (and all) desktop readers you have.
That's the basics. Next you fine tune. - Fabe