@knc1: I'm betting on what ixtab refers to as 'usual weirdness'
.
AFAICT, even the people who got 5.3.6 truly OTA got the exact same build as the one on Amazon's site.
The catalog is known to behave erratically, especially with thumbnails, under certain circumstances. I never had any issues with Kindlet myself, but I did manage to 'break' thumbnails in fun & wonderful ways when I tested the Calibre patch when the PW came out.
Which leads me to, @nasser: Try deleting the Kindlet *from the device itself* (not over USB or SSH), then put it back over USB (in mass storage mode, not SSH/anything else). See if that helps.