Well I figured out a solution of sorts: when I download via Overdrive, Mantano cannot directly open the epub files. Instead, I have to download the files from my library as the .acsm files that adobe packages their efiles in. Then if you sideload those .acsm files onto your kindle and "Import" with Mantano, it converts them to .epub format and sticks them in the "Digital Editions" folder.

Bottom line: if I download library Epub books with overdrive, I cannot read them in Mantano. I have to download them first to my computer in .acsm format, then sideload to Kindle, then import into Mandano. So I don't really need Overdrive I guess.