Your department chair is 100% correct in asking you to remove letters from faculty internal to your university. She is doing you a favor by mentioning this to you!
To be honest, that you think this might be appropriate makes me worry that you may have insufficient familiarity with how the tenure and promotion process works at American universities. The whole purpose of these letters is to get a sense of your academic profile in the academic community at large (i.e., outside of your institution). A good such letter is written by someone with a lot of status in the community and a good perspective...which includes a lack of involvement in local affairs and politics. On the one hand, it is a waste to get a letter from faculty in your department, because faculty in your department already play a much larger role in the tenure and promotion process: they evaluate your entire dossier and vote up or down. On the other hand, if you are asked for five letters of evaluation and you choose two of them from your own department, it will likely create a very strong negative impression: it looks like no one outside of your department has ever heard of you and your work.
I don't mean to be harsh or alarming, but: you need to get a clue pretty fast. Calling attention to the fact that internal letters are not explicitly against the rules of tenure and promotion is absolutely the worst perspective you can have on the situation: in this regard just as is usually the case in life, not everything that is a prohibitively bad idea is explicitly prohibited. I strongly recommend that you approach a trusted mentor (for this inside your department is probably better, although you should take whatever you can get) and say something like "I realize that I have relatively little knowledge of how the promotion and tenure process actually works beyond the formal rules, which I now have reason to believe do not tell the whole story. Can you help me out?"