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Return the kindle
Get a nook or sony reader
What the OP wanted to know was if the kindle can do lending of adobe DRM epub, and the answer is no, it can't read overdrive books from libraries, so return it, and get a nook or sony reader and you'll be all set.
You can buy any book pretty much from B&N and it will work on their reader (cost may be slightly higher than kindle store) however, kindle probably won't support epub/library lending any time in the future. Besides epub is the most common ebook format online next to PDF. Mobi is what kindle uses, and it is far less common. Converting is always an option, but it can be problematic if you are working with protected documents (like library books).
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