martinbd, it sounds like you are experiencing the same thing as Ben Campbell. If I understand you correctly, the drop caps work correctly in every chapter unless the story is longer than aproximately 32,000 characters, at which point the drop caps fail. Unless someone comes up with a solution to this problem, you may want to break the long stories into smaller ones.
And do I understand correctly that having a 32,000 character story doesn't break the document, just that story (i.e. other, shorter stories are OK within the same document)?