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Always upload epub2 to Amazon KDP.
Also "mobi" is only for ancient kindles.
Make sure Tablet is selected for target, not any kindle, to leave images alone.
To test locally with a real Kindle, use azw/KF8.
For Smashwords (only) you'd make a dual mobi that has old mobi and KF8 in it as Smashwords can't tell if someone has an ancient or newer Kindle.
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