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As BOb says, many of us in the UK use Sony's US store.
I did this by downloading the software from their us site. The library software is the same, but it connects you to their us store instead of waterstones. You can use waterstones' website but you can only download books from the sony connect store if you have the us software installed.
I haven't bought anything from the us store, but I have downloaded free books from them. I understand that you need gift cards to buy from them, but I haven't got that far yet. I have bought from Books on Board though, with no problems, and their prices seem better than in the UK. For BoB, my location is set as US and I use my paypal account, and I've had no problems.
There are also other UK sites - WHSmith also sells ebooks and I think there are others, but to be honest I only got my reader in April, and I've only bought a few books so far because I've been able to download so many for free.
Hope this helps, but if you have any other questions please ask. Sorry, your installation question about VMWare etc was too technical for me!
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