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I haven't tried any PDF library books, but I avoid those when possible anyway, they just don't work nearly as well as the ePub library books on my nook, I wouldn't expect any different with the Literati. I've had good luck with ePub library books on the Literati so far, though...knock on wood!
One thing I learned from using ADE & the nook - it's helpful to have the same email & password for both ADE and the Kobo account. That (allegedly) helps them talk to each other a bit more readily.
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