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The "incompatible format" message is ok, since only ebook formats are recognized (epub, txt, pdf, rtf, mobi and so on)
If you did an upgrade all the books that came with the device are erased during the update proccess (there is an update warning about this in the device or in the manual). You must load these books again. If you didn't made a backup you can download all at jetbook's website
About DRM and ADE read the forum, I think that someone (Ken?) made a post explaining how to register the device with ADE.
By the way, if your ADE folder was in the internal memory, it was erased too. Backups are good.
HTH
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