Thanks for those tips guys. I managed to get rid of the DRM and transfer the book using calibre.
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This might be possible using Wine under Linux but is easiest under native Windows.
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Would be great to know how this can be achieved under wine. I would prefer it if I don't have to boot into windows when I want to remove DRM from purchased books.
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Yes, this is a known bug. Every time you 'SYNC' with the desktop app, it resets the status of all books.
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That is an annoying bug. I would have stayed away from the application as well but thought it might help me fix the locked content problem.
I hope a future firmware update introduces better bookmarking, including some way of managing bookmarks.