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I have a 505 not a 500, but I assume the firmware is similar. Have you tried formatting the internal memory using the Reader's internal formatter? Try this:
* Press Menu button repeatedly until you get to the top Menu
* Press "Settings"
* Press "Advanced Settings"
* Press "Format Internal Memory"
* Press "Mark" button (bookmark button)
Internal memory should now be formatted.
-Laserjock-
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