Debrah, 1/14 actually partitions off half of the internal card to install apps on, so you should have plenty of capacity to install everything you need (500+ MB). You can use a card in the regular external SD slot to keep your books and other files on.
If you really want to put a larger card inside the machine, I'm pretty sure you could do that and use the updater program from Pandigital's site to "upgrade" to 1/14 again (on top of itself) which would then partition off half of whatever card you stick in there for apps space, with the remaining half available for you to stick other files in. (but verify this with someone more knowledgeable than me before you try it)
But really I can't imagine you would need more than the 500MB already available to you for apps.
Then just get a 4 or 8 GB SD card to stick in the top slot for your files.
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