Solution!
With thanks to Steve and Andy at Sony, my reader has returned to operation!
To recap the symptoms, the CONNECT Reader software and PRS500 worked fine separately. When the reader is connected the CONNECT Reader software freezes up. Once the reader is disconnected, both work OK. Alas, that means no new books or files. Arrgh.
The following things were NOT the problem, though worth checking first: the cable, the cradle, the Memory Stick, the drivers, the CONNECT Reader software. It's of note that uninstalling the CONNECT Reader software does not delete the library on disk, as some folks had led me to expect.
The problem is that the USB link was in a "bad state" in the reader. The hardware folks at Sony know that this can happen, that is why the "Don't" symbol appears on the screen. I explained that this was dumb because the cradle requires the cover to be closed on the reader, so you can't see the symbol. The hardware guy had not actually used the cradle.
The problem can only by reset by a complete reset. There are two kinds of reset, after you do the Vulcan-pinch you can choose to erase everything and return to factory settings or not. Just rebooting, without the erase, does not clear the problem. After you erase, you only have the four "sample" books on the reader. All the other excerpts are on the installation CD (as somebody else here told me).
However, the good news is that the erase does reset all the USB registers and fix the problem. Prevention requires that you exit the CONNECT Reader software before you disconnect the cable or cradle. This is not in the manual, at least I never saw it, but the hardware guys both said it was mandatory.
I hope this helps the next user.
/Randy
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