I once downloaded something in MS Reader format from some website where the book have some error in libprs500 and didn't load in Book Designer.
What you can try to do is convert it with ConvertLIT (clit) into HTML and see if it works. If not, it's a problem with the file and nothing you do will work. My guess is that MS Reader is more forgiving of errors or that because MS Reader is only reading a part at a time it has not yet gotten to the error where libprs500 and Book Designer read the entire file so do hit the error.
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