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By hard margin do you mean hard line breaks? If so try enabling Heuristics under the conversion options, specifically the unwrap lines option.
The answer to the margin question depends on how the margins are defined. It may be automatically fixed by heuristics. Otherwise you can try editing the epub using the tweak epub feature or Sigil and editing the css. In the same way you can add indents.
By your description though I suspect the epub might have been created using an online pdftohtml tool - they can have some ugly html, cleaning it up might only work if you take drastic measures like converting to text/rtf first and hand editing the file.
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