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I had the same problem.  My book was denied the premium catalog because of two problems: a price on the cover and a hidden bookmark.

After fixing the cover, I checked the bookmark but couldn't find anything wrong.  I resubmitted, and sent Smashwords an email letting them know I couldn't find the error they were telling me was there.

Didn't hear back from them, but the book was approved this morning.

Seems like the meatgrinder is spitting out errors when there aren't any.
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