boxcorner, my system is set to show all hidden and system files. That said, I believe that Vista still does try to keep some stuff out of reach. I think I am going to have to install Reader Library on an XP computer, make some sample annotations and see if I can figure out where they are stored. Then at least I'll have a better idea of what to look for.
Bookworm_Girl, yes, like you I have hundreds of e-books and think the Reader Library software is useful (and it seems to work fine on my computer). The file structure on your computer looks very similar to mine, even though if I recall correctly you are using a Mac. I wonder if the person who mentioned a "markup" folder containing *.annot files is using a different version of Reader Library. I want to get to the bottom of this.
Hold everything. Bookworm_Girl, I just reread your comments and took a closer look at the xdi files. Mine all looked too small to contain my notes, but I opened the file klibrary.xdb in Notepad (actually, I made a copy of it and opened that), and that's where my annotations are.
Apparently they are all kept in one file. Now I'm getting someplace. My next step will be to see if I can use this file to transfer annotations for specific books to another computer. It may take me a while for me to try that, though. For right now, I'm just reveling in the feeling of finally having a clue!