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What "Generate Table of Contents" button? There's a menu item, or a keyboard shortcut, but no button that I know of. Does selecting the menu item launch the dialog that allows you to choose which headers you want to include in the TOC? Or do you not even get that far?
Keep in mind that if you're working on an EPUB3, Generate Table of Contents alters the NAV document (nav.xhtml) and not the NCX (toc.ncx).
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