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Just as a follow up. The Nook would actually lose audio whenever headphones were plugged in. Even if the headphones were removed it would no longer play sounds and Pandora was not audible. A full power off/on would restore audio.
We were about to return it, so I reset the Nook (unregistered it) which wipes it clean. I decided to try one more time in the event that B&N people wanted to test it. And oddly now it is working fine. I have no clue why doing a full restore would be able to fix this, but it seems for now.
I also noticed that after resetting hers, she now has 2 new kids books and another sample book from B&N. They never showed up on my device, which seems odd. Oh well.
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