I am using xChm v 1.2. in Ubuntu Dapper Drake and I get the error window "No handler found for image type" for some chm files when i click any bookmark. This becomes an irritation when seen regularly.
Is this normal behaviour?
It is, depending on how the Ubuntu maintainers have compiled wxWidgets. That error means that the HTML rendering component (wxHtmlWindow from wxWidgets) is being asked to display an image type that it doesn't know how to display.
For example, wxHTML might know how to display JPEG files, but not PNG files. This depends on how wxWidgets was compiled, before xCHM was linked with it. Ask your distribution maintainers.