Okay, I tried again, created library folder. Still got the bad database using my PC with Vista. Then I thought about my new laptop with Windows 7.
I downloaded Calibre to my laptop.
It loaded right away with no problems!!!
I was very excited. There was the Calibre quick start guide. So I plugged my Kindle into the laptop and was able to move the Quick Start guide to my Kindle. On Kindle it looks exactly like the books I have bought from Amazon. I'm so frigging happy after 2 very frustrating days spending about 5 hrs on Vista.
There must have been a conflict going on with my PC.
I haven't tried to move the LRF books yet from laptop to Kindle, but I'm assuming that since the Quick Start guide went through that those books will as well. After work today I'll try it and post the results.
Thanks so much for the attempts at helping this noob to the e-book world.