Hi Zero9,
I never noticed this Thumbnail directory before you mentionned it.
It's funny, because the PRS-505 does not display thumbnails of the books stored in its memory, now does it ?
An educated guess would be that they are useless, but when looking a bit deeper, I found out that they are referenced by XML metadata files (e.g. e:\Digital Editions\manifest.xml)...
You can still make a backup, try and delete them, and tell us if you crashed your Reader ...
Cheers,
David.