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You should be running this in a terminal window:
Open a Terminal window by opening the Finder and pressing shift+command+U. This will open the Utilities folder. Then, double-click on Terminal. You can also open Terminal by opening the Finder and choosing Go -> Utilities to open the Utilities folder, and then double-clicking Terminal.
I don't understand .ereader2html.py. Do you have a "." at the start of the script name? If so, remove it and try again (perhaps "." scripts are treated differently).
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