[sonyreaderfan]

Yes, you can take notes and highlight on PDFs. You can highlight and take notes on any type of documents displayed. However there is a big limitation on taking notes on scanned pdf (but not on epubs or pdfs that can be reflowed). You can only take notes while the page is displayed in the original format, because it's like writing notes on a picture. So if you have zooming level set up, taking notes will put the page into the original size. You can take notes while the page is displayed in landscape mode however. It still has to be in original size. So if you're using margin cut view, the document has to revert to original page view. Of course if you're viewing the document using reflow (e.g. making the text size bigger), you don't have to go to the original size (because technically, the page is in the original size. You're just making the text sizes bigger).

Btw, on what Rizla said, if your documents are scanned using OCR software (in general if the document is word-searchable), the documents can be reflowed. If the document isn't content-searchable, it can't be reflowed.