1) In order to connect the Story to the PC such that the latter recognizes it as a valid storage, you need to do this:
a) turn on the Story (do not connect the Story to the PC at this point)
b) when the Story is turned on, connect it to the PC's USB port.
c) on the Story's screen, select PC connection using the direction key. Note that you'd have to do this quickly or the Story defaults to battery charging.
2) It's easier to navigate if you use the internal memory for storage of your books (assuming you're using the original Story, and not 'Cover Story'). On top of that, the original Story has a bug such that it doesn't remember the zoom level for ebooks stored on the SD card.
3) I don't use a protective cover for my Story, so I can't offer any suggestions.
Btw, do check if you're having the latest firmware. You can find the latest software at iriver.com.