I use Calibre to convert LIT to EPUB or MOBI. You can convert in batch as well.
It does really good on lit files. LIT just isn't a good format to use for the Pocket Pro with either firmware.
EPUB works best it seems and Calibre makes it a snap to convert to EPUB which uses Cool Reader 3 or ADE
I'm no expert but It almost sounds like something is corrupted in the file system.
I would try reflashing the firmware first then try a book on the reader's internal memory to rule out the SD Card causing it.
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