From the original post, you said that you installed the BC Palm tool, if you mean the ABC Amber Palm Converter it will convert most (but not all) PDB files to multiple text formats but LRF is not one of them. They can however create very usable RTF and HTML files for subsequent processing by other programs.
The only connection between the Sony eLibrary software and BookDesigner that I have discovered is when you choose to preview the LRF book that you have just created and it invokes the software through the registry entry for LRF type files. Beyond that I do not think there is a linkage that should have caused any problems with your computer.
You did follow Jon's excellent instructions for installing the base BD 4.0 and then unzipping the contents of the latest stable update on top of that original installation, didn't you? I do not know of any use that BD 5 makes of any USB driver as your original post seemed to imply. Perhaps you intended the USB reference to be directed at the install of the Sony Reader software. As I understand it (and please correct me if I'm wrong) the Sony USB driver is required for the 500 but not for the 505 since it is already recognized by the system as a mass storage device.
libprs500 has its own USB driver for the 500 and as I remember it does not work well if it is installed on the same machine as the Sony USB driver for the 500. I know kovid has a 505 and is updating his fantastic collection of programs for the 505 but I do not know where he is in the process. Perhaps this is a better choice for you than BD as you can use the HTML output from the Palm converter as an input for html2lrf in libprs500.
I use all three (3) programs and keep the Sony eLibrary and BD on one machine (WinXP) and libprs500 on another machine (also WinXP.) Both machines have been very stable for me.
I hope this helps.
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