I'd heard last week or so that InDesign's super new feature—the ability to break a book into chapters automatically upon export to ePub (embodied in the "Use First Level Entries as Chapter Breaks" option)—would make hyperlinks break.
What I found yesterday is that even if you're the one that created the multiple chapters, InDesign still creates faulty links.
If you open up the generated ePub, you'll find that all of the links created are just URL fragments, that is, there is no reference to a particular book file, only the anchor reference to a particular place in the current file:
<p class="author" xml:lang='en-us'><span class="small-caps"><a href="#economy-anchor">Economy</a></span></p>
This is a little like sending a letter to someone on 456 Main Street without specifying which town they live in. It's not going to get there. The result is that only links within a single InDesign file will work.
I've heard there's a guy in the Netherlands who's developed a script to fix this problem, but really, shouldn't Adobe have done that?
In addition, I've found that InDesign doesn't export generated tables of contents to ePub at all. They simply disappear from the exported ePub (though they appear just fine in PDFs).
I am just amazed that this bug even exists, and that it hasn't been fixed immediately. InDesign is a great tool for creating ePubs but if it breaks all your links, that's pretty much a deal breaker.
Lindsey Martin reports that links in PDFs exported with Interactive also fail. I find this amazing.