This is the problem here:
<div id="Layer2" style="position: absolute; left: 655px; top: 167px; width: 140px; height: 200px; z-index: 3"><!-- #BeginSnippet name="Hdog" users="user1" --><img src="HpImages/Rascal.jpg" width="145" height="218" align="absmiddle" /></div>
Your opening Snippet Tag is "inside" a DIV, and so when the editable code is loaded into the editor, it starts with this:
<img src="HpImages/Rascal.jpg" width="145" height="218" align="absmiddle" /></div>
(Notice the ending </div> tag.)
So the editor does not know what to do with this "leftover" closing div tag, and since it tries to produce compliant code.. it automatically creates an opening div tag to match the close one it found. This is then messing up your code when it's all added back to your page.
The solution is to adjust how you want your editable regions to be located. You might need to have two editable areas in this situation. Or you could move the editable region "up" one div level....
I hope that makes sense. basically, whatever code you have specied as "editable" inside the Snippet Tag region must be valid code.
Let me know.
