I was asking you to move your library to the SD card to see if there was possibly a problem with internal memory but I guess you already did that. You say you have 2.26GB of internal storage and 3.66GB on the SD card. Is this looking at it with a computer? What does it say when you go under Settings and Device Storage? I have a 8GB SD card installed on my PE and it is reporting the Data Storage Device as an SD Card and Application (Internal) Storage Total Space at 322 MB. I read somewhere on this forum that whenever the user library is moved to an SD card you lose the 3 GB of internal storage for books, downloads etc. and only system storage remains on the device for Apps and services. Can any other EE or PE owner with an SD card verify what they see under Settings - Device Storage.

The /sd/download folder is definitely where downloads go if you are using the SD card to store your library. Have you tried downloading an App file on your PC and then use the transfer cable to copy it to another folder on the Edge, like documents for example, and then opening it? As far as the Apps running, Android caches the status of all opened Apps before they are closed so that if you run them again they will open back up where you left them.