The Android operating system doesn't use the same file system as Windows. So, putting it in a card reader as you found out, won't work.
You should be able to "see" your card when you plug the cable into your computer, but you need to enable SD storage. I don't remember the exact wording, but when you plug the cable into your Nook, your computer should make the little ding sound and show it's attached.
If you look at your Nook at the bottom, there should be a new icon. If you swipe up, you should see the notice to enable storage (or whatever it says). Your screen should turn black and have the Android robot and an enable button. When you press the button, your computer should recognize the SD card and pop up the box asking what you want to do.
I wish I could tell you exactly what it says, but I put my Nook back to stock last night and haven't made a CM7 boot card for it yet.