You need to delete the contents of the .adobe-digital-editions folder and reboot the device, and then go open a purchased book from B&N.
To remove the contents of the .adobe-digital-editions folder (it's hidden)
With the device hooked up to your computer, and let us say the NookColor is on drive E:, then in the command prompt type:
dir ( should see activation.xml and device.xml )
dir ( thos files should be gone)
Then disconnect the device, reboot it, and open a book (and then close it or not - it's the opening of a book that fixes things up sometimes)
Then connect it to the computer, launch ADE, and you should be able to authorize it.