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There is a KU management page where you can return books you have borrowed. I don't know if EVERY book I've borrowed from KU is listed along with it's borrowed/Return status, I've never done an audit. But it sure looks like all of them!
The reason free books show up as purchased is that apparently Amazon considers a free book to have been "purchased" for $0.00. So it would show up as a purchase.
Prior to buying a kindle device, I used my android tablet and my smartphones with the Kindle app . KU KU worked just fine with them, I would be surprised if it didn't work on a Windows PC. Amazon hates turning away paying customers!
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