We need more info.
I used Word 2003. Saved as .doc. I had .15 indents, no hard tabs.
You need to turn on the formatting and look to see if you have anything odd.
You have to use simple formatting. Nothing fancy.
I don't know what you mean by empty space.
Between chapters, use page break or section break.
I am hoping Melissa comes along.
As Strayer said, using Word 97-2003 plays nicer with Pubits conversion software than 2010. Not sure why, but there it is.
Yes, you need to make your formatting visible so you can see what your MS looks like. Click on the ¶ symbol and it will turn on everything. You don't want more than two or three returns after an end scene or chapter otherwise you will have giant gaps in the epub resulting in blank pages. As Strayer said, inserting a page break is best.
If possible, you should upload a validated epub as this will look and function best. But if not, then a clean, minimally formatted 97-03 doc will do.