Thanks ntamas!
After couple of hours of fiddling with Amazon, I created a dummy US account, changed shop to US, deregistered and registered my PW2 to new account and it works!
So far all free applications and sudoku and chess work great!
My Kindle got new life! Many Thanks!
Btw I see that you can download applications in azw format using usb cable, so it seems that anyone with this file can play these games.
If someone has some other kindle active content games/application maybe we could swap?