I'm wondering if you did the Overdrive update that was just released before your iPad got wet? I think there may have been issues with the update and Adobe Authorization as I had the same problem. But I was getting an Adobe Authorization Error 256 message every time I tried to authorize and it was not working for 3 days. I did delete Overdrive from my iPad ( not recommended unless you have to) then reinstalled, then I synced my iPad to my computer. Still couldn't get it to authorize.
This is what I did and was able to get it working...
In settings at the top it should say Adobe Authorization, click authorize it should ask for your ID and password click authorize may take a minute, if that doesn't work I did the following.
In settings I turned off Auto play, Cellular download, automatic downloads and auto check messages. I then tapped clear deleted titles even though there weren't any, then I tapped check for messages.clicked ok when it said there were none. Then clicked Authorize, tried two times with everything off then when it didn't work I turned on all the settings I had turned off ,did the Authorization again and it worked. I was able to download the books from the library directly from my iPad.
I hope this helps, I know how frustrated I was when I couldn't get it to work!
Yep, that was the answer. I did the same thing last night: deleted OverDrive from my iPad and then reinstalled. Thanks for taking the time to answer. I'd planned to post my result this monring.