Just to be clear, when you run cat /etc/init.d/nginx, the output is HTML?
If so, there’s something wrong with your init.d script. And by wrong, I mean, completely bananas.

Something is wrong with your installation, try start over.
also you can try: service nginx start

try again wget -O init-deb.sh http://library.linode.com/assets/660-init-deb.sh my guess is you type it wrong first time and you got a 404 error, so thats what was saved to the init-deb.sh file

yes, you are getting an error 400 and that’s what is storing on the file, no the real script. What is weird is I can access the file at http://library.linode.com/assets/660-init-deb.sh so you droplet must be having trouble accessing that host from linode.

So, I will recommend you installing Nginx from a Repo, there is reason why repos exist. is to have the latest and fully functional approved package by your OS maker, maybe not the newest, but is the one they know it works like it should on your OS. pretty sure ubuntu has a pretty recent version on its repos, I use CentOs and even with a not so new version of Nginx I can be sure is pretty reliable.

Now if you still want to do as some random person suggest and use scripts and stuff modified or made by others without knowing whats on it, here is the content of the file at http://library.linode.com/assets/660-init-deb.sh

#! /bin/sh

### BEGIN INIT INFO
# Provides:          nginx
# Required-Start:    $all
# Required-Stop:     $all
# Default-Start:     2 3 4 5
# Default-Stop:      0 1 6
# Short-Description: starts the nginx web server
# Description:       starts nginx using start-stop-daemon
### END INIT INFO

PATH=/opt/nginx/sbin:/sbin:/bin:/usr/sbin:/usr/bin
DAEMON=/opt/nginx/sbin/nginx
NAME=nginx
DESC=nginx

test -x $DAEMON || exit 0

# Include nginx defaults if available
if [ -f /etc/default/nginx ] ; then
        . /etc/default/nginx
fi

set -e

case "$1" in
  start)
        echo -n "Starting $DESC: "
        start-stop-daemon --start --quiet --pidfile /opt/nginx/logs/$NAME.pid \
                --exec $DAEMON -- $DAEMON_OPTS
        echo "$NAME."
        ;;
  stop)
        echo -n "Stopping $DESC: "
        start-stop-daemon --stop --quiet --pidfile /opt/nginx/logs/$NAME.pid \
                --exec $DAEMON
        echo "$NAME."
        ;;
  restart|force-reload)
        echo -n "Restarting $DESC: "
        start-stop-daemon --stop --quiet --pidfile \
                /opt/nginx/logs/$NAME.pid --exec $DAEMON
        sleep 1
        start-stop-daemon --start --quiet --pidfile \
                /opt/nginx/logs/$NAME.pid --exec $DAEMON -- $DAEMON_OPTS
        echo "$NAME."
        ;;
  reload)
          echo -n "Reloading $DESC configuration: "
          start-stop-daemon --stop --signal HUP --quiet --pidfile     /opt/nginx/logs/$NAME.pid \
              --exec $DAEMON
          echo "$NAME."
          ;;
      *)
            N=/etc/init.d/$NAME
            echo "Usage: $N {start|stop|restart|reload|force-reload}" >&2
            exit 1
            ;;
    esac

    exit 0

Just copy to the file manually and continue with the tutorial where you left.