Do you have the newest version of Calibre? Maybe you should post the problem with any error messages in the Calibre forum. Kovid seems very responsive to fixing problems with Calibre as there are updated versions every few days now.
Also, are you converting in bulk or one at a time? Try one at a time if you haven't. I've converted several hundred .lit files to .lrf using Calibre and the results have always been great. I usually convert only 1 or 2 books at a time. I convert to Times New Roman font size 10 and the file is very readable in small size on the Sony. If my eyes are tired I can change to medium and it's fine. If you have really good eyes you may want to go smaller.
You can also try .lit to .epub as that can be used on the Sony. With .epub I use Times New Roman font size 13 to get the same size display as size 10 in lrf.
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