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There are ways around DRM, I second ATDrake's suggestion of practising stripping DRM and converting. I wouldn't want to do it routinely, but many people have no issues with it. If you decide that it's not a problem, any of the readers would work for you. If you don't want to, Kindle is out because it doesn't do library books.
You may find using the nook in Canada a bit of a hassle, at least when you do want to buy books. The B&N book store is restricted to the United States, though there are ways to get around it. B&N's DRM is different than the ADE Sony and Kobo use, so you would have to strip it if you got a Sony or Kobo (or Kindle) and wanted to buy B&N books.
The Kobo doesn't have as many features as the others, and some people say it is slower. I believe it also has an older screen type.
The Sonys are more expensive, though the 350 (5" screen) is on par with the Kindle at the moment, but neither the 350 nor the 650 have wi-fi. The touch screens are very nice, page turning is a breeze and you can look up a word simply by double-tapping it.
If you can, have her go to the store(s) so she can play with the different models. The form factors are all different, and it's a big deal for ease of use and comfort. (As an example, the touchscreen was a must for me, since I kept accidentally trying to use my boyfriend's nook as if the entire thing was a touchscreen. Other people don't like it as much because it lessens battery life to about 2 weeks, and it can be easy to brush it accidentally and turn pages when you don't want to.)
Are there any specific features she wants? Audio player, text to speech, dictionary, highlighting, note-taking?
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