What you need to do is use ConvertLIT to create a DRM free LIT. Then use the DRM free LIT with lit2eob to expand it. Then take a look at the HTML code and see if you can figure out what the problem might be.
In another thread on MR, there was a book someone eas trying to convert from Mobipocket, but it was coming out as one continuous page which is not good for the 500. I had to look at the underlying HTML code to figure out how to convert it so it would work on the 500. You might have a similar issue needing to see the HTML code to see how best to handle it.
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