Does someone knows an application to create/edit *.chm files? Any suggestion will be much appreciated!
This is Microsoft proprietary format, in its core, those are HTML files, linked in some specific way. As far as I know, there are only tools to decompile such file and dump into plain HTML.
Frontpage allows you to work with compressed html files;
there are also many inexpensive utilities such as winchm
that allow you to edit, create or convert these files.