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From what I recall (I ran into this last weekend):
When you do a epub->mobi conversion, the default option will append a regenerated (correct) ToC. The first ToC will be a more or less direct conversion of the EPUB version, however it uses a different method for lookup and will usually just seem to be text or broken links. When you go to the ToC, press next page a few times and you should land on a second ToC, which iirc is the correct mobi version.
There's an option to remove the existing ToC, as well as one to use a generated one, you should do both.
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