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I had this exact same experience; login errors and I couldn't register my device. I didn't try registering directly on the device over WiFi, but in retrospect, I wish I had now. I essentially created a new account using a different email address, but in the process, lost all the lrf files I had previously.
Can I 'logout' of the Sony Reader software on my Mac, login with my previous email account, and re-download the books in ePub format, and then transfer them over to my device (under a different email address?). I suspect this is going to be messy and will require some de-DRM'ing.
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