When I bought my iRiver it came with firmware v1.5. That one seemed to work fine with DOC and TXT, or at least I didn't notice any problems with these formats. I remember distinctively that I tested my Story for all supported formats. If they were causing problems, I would have made a bit of noise then.
After I upgraded the firmware to v1.6, I didn't use the gadget much. I bought my Jetbook around that time, and jBook quickly became my favorite reader. The reason that I preferred jBook over Story was the look of the page on Story when reading an EPUB. I'm not sure if you've noticed it, if you look at the font closely, some vertical lines on some letters are darker and thinner than others. Annoying.
Then, recently, I have a need to read some DOC files. So I upgraded Story to v1.71.
So the last working version was probably v1.5. But it had its fair share of bugs (eg it wouldn't work with overdrive drm).