I am sorry you are frustrated. Maybe that one book that keeps making all of the bookmarks is poorly formatted? Do you have problems with just that one book? Rather than delete 964 bookmarks, you could just delete that one book and it would remove all of the bookmarks too. See if the T1 starts behaving normally after you delete that book.
If you are still having problems, then maybe something is corrupted in the databases? One option is that you could reformat the T1 (Settings > Initialization > Format Memory). WARNING: It will delete all content from your reader including books, notes, and the factory pictures and audio. But, at least it will be clean and fresh like new.
Rather than use the Sony software to transfer books, you could drag-and-drop your files into the Books folder on the T1 via Windows Explorer / Mac Finder (file path: Sony Reader/media/books on your T1). Or, you could investigate the alternative software calibre which is a popular option that many people use to manage their book libraries rather than the Sony software.
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