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There are several tools that can extract the HTML from CHM. There are also tools that can read the CHM (for editing) and than save it as HTML.
Don't run the HTML through Calibre, since it will not help you. Calibre follows this procedure and apparently there is some code in the HTML/CHM which is causing your issue.
Then you either clean it up manually in a text-editor or you can try loading it into Sigil to see what happens there.
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