This happened again tonight (8 months after the previous episode). Tonight, after I had connected my reader to my PC o get a couple of books I'd bought from Kobo, the reader subsequently asked me to authorize it, and even after I did it gave me an error when trying to open any of the Overdrive library books I'd been reading earlier in the day.
This time instead of redownloading all my Overdrive library books I just redownloaded one of them. Now I have two copies of that book, and it and all the other library books that were already on my reader are now readable again.
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