Side loaded books have no DRM unless your loading ADE books with DRM removed. If your giving away those DRM books they still include code that identify you as who bought that book.
Only problems I had with SD cards were because of books with format problems. Loosing covers with over 1500 books. I use 4Gb Sandisc SD cards full over write formatted with SD association software without any problems loaded with 2500+ books.
I have updated to 2.0 after factory reset and after it had account reauthorized inserted SD card loaded with books without any problems.
I gave my sisters touch readers not Kobo but Sony T1 because $59 price and better software. (still not perfect)
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