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Jim: Your Calibre is probably configured to prefer mobi over azw3 when sending to kindle. As a result, even though you convert your mobi to AZW3, it's still the mobi file that gets uploaded to your kindle.
With the Kindle plugged connected, in Calibre, click on the Device Down arrow, select "Configure This Device". Find and hightlight AZW3 in the list of available formats, click on the green up arrow to movie it to the top of the list.
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