I have the PRS-300 and download library books, usually in the .epub format. Recently I made the mistake of putting both .epub and .pdf on my ereader, and I got the protected page. Usually I bypass this by re-trasnferring an .epub book. However, this time it didn't work. I have deleted all the books on my ereader, redownloaded some from the library, etc. And even with no .pdf books in my librar, no .epub books work anymore! I don't know to fix this. I usually work in ADE for this, have found that sometimes the Sony Library sorts it out, but now am just super frustrated.
I also am having the same issue. I found a Mobile Reader forum
http://www.mobileread.com/forums/showthread.php?t=68463 that talked a lot about it, but no real answers.
I don't know if it is ADE or Sony. I wonder if just using the Sony ELibrary rather than ADE would work? Or use a differnt device?