You're posting in the wrong sub-forum, it would've been more appropriate here (Cybook Gen3 -> Content):
https://www.mobileread.com/forums/forumdisplay.php?f=142
But to answer you question, the Mobipocket format should work best. You can find e-books in that format here on MobileRead and here are some other sources:
https://www.mobileread.com/forums/showthread.php?t=3968
I don't really understand your second question. JPG and PNG both work fine on the Cybook, one is lossy but smaller in filesize (JPG), the other one is lossless but bigger in filesize in general (PNG).