Sherry,
do you have an english version: language set = 002
or Chinese version: language set = 010
You can find this at the device manager -> iLiad Settings -> page 10
The Chinese iliads don't have a mobipocket reader installed, in stead they support the EBA and XEB for Chinese e-books. This would explain why the *.prc files are not recognized by your device.
If so, perhaps iRex support can reflash your device to proper english version?