I'm in the same situation.
I have installed the latest Reader Library software on an XP box. It sees the reader, but it won't delete what's already there, saying: "All of the items you selected are synchronized and cannot be deleted directly. To delete synchronized items, delete them from your Library and your Reader will update during the next sync process." Of course, my Library is already empty, so I can't do that.
You say to use an old version of Calibre, but which one? I've tried a few from here
http://www.utterlyinsane.org/calibre/win/ but apparently none see the Reader.
More importantly, I remember that the Connect software used to pre-format the ebooks, so that you wouldn't have to wait minutes for the "Formatting..." message while opening a new book or changing the font size.
Does anybody have a copy of the old Connect software? I'd like to use it for that reason alone, if I can get it to work without crashing too much.