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I know this question was asked years ago but still worth providing the solution...I had the same problem and we discovered that it was a windows security issue. When downloading a chm file from SharePoint windows security assigns the chm file a ‘blocked’ status. This status can be overridden by clicking ‘Unblock’ on the General tab.
To fix this issue on each computer, the SharePoint site must be added as a trusted site in windows security settings.