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In my experience, Reader Library freezes if you sync, but not if you drag-and-drop. So my solution to the same problem is to use Reader Library to export annotations. I have it on two PCs, both running W7 and I use it with a PRS350 and a PRS950. I never get a freeze - unless, that is, I try to sync.
Another idea - but not one I have tested, as I don't use Reader for PC - could you just remove DRM from the books via calibre and then import the books in Reader for PC? I think (THINK being the keyword - I have not tried) that the export limitation is only for DRM-locked material. Not sure, but it might be worth a try.
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