If her 505 is authorized to your account it should be fine. I believe you can authorize a total of six devices (Readers and/or computers) to one account, but a device can only be linked to one account at a time so if she has her own account she would need to de-authorize her Reader from that account before being authorized to yours.
If I'm incorrect on any of this I'm sure someone else will be along with the correct info and I can blame my mistakes on my overindulge in margaritas!
You can purchase LIT format at Fictionwise and Books on Board.