Yes, I think exporting to html from Word would be the easiest way. I've looked into your HTML file converted from RTF and it looks like there was some mixup with the encoding when it was opened with PSPad in the first place. There is no easy way to fix this AFAIK.
BTW If you have to edit HTML files on a regular basis and want a decent WYSIWYG editor, why not try Nvu (http://www.nvu.com/)? It's free and relatively easy to learn for people who have some experience with Word, but don't want to dig into HMTL too deeply. -- <http://forum.pspad.com/read.php?2,31976,32062> PSPad freeware editor http://www.pspad.com
