LRF is the Sony format. It can also display RTF and TXT files (without graphics.) It is said that DOC files can also be used as they are translated through the new Sony Connect software (does not work with my current software for the PRS-500.)
On the MobileRead Wiki Conversion page is a link to Stingo's Word Macro that will remove the hard line breaks at the end of each line in the Project Gutenberg text files. The file can then be saved as RTF and loaded to the Reader.
Most of us use either libprs500 or BookDesigner to create LRF files for the Reader. Both can take almost any file and create an LRF file. Many prefer to use an HTML as the source file.
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