Ah, thanks, but a little misunderstanding. I meant you should use the same file as you did before, but without nXhtml.
However I should explain a bit more in detail.
It looked to me like you were editing a html file. You can edit those files in Emacs without nXhtml (which I guess you know). There are two main major modes in Emacs itself for it, html-mode and nxml-mode (the latter for xhtml only).
Can you please try (without nXhtml) these two modes with your file? You can switch major mode by doing something like
Both nxml-mode and html-mode obey comment-padding, though slightly differently. nXML defaults to no spacing (like nXhtml); nXHTML seems to replace the first character of comment-padding with a space. So, for example:
(setq comment-padding "xy")
<!-- yy --> - html-mode
<!--xyxy--> - nxml-mode
It seems to be only nXhtml-mode that inserts <!----> regardless.
Thanks for reporting this Nicholas, but I believe this is a bug in Emacs.
Can you test this in a fresh Emacs without nXhtml. Just start with
emacs -Q
If the problem is there too then please report it as an Emacs bug. Tell me which it were so we can fix it here if I am wrong.