Ok, I've made some headway on the LIT problem. Apparently, I need to do a string replace in C to double all "\" characters in the path. Don't know why PDF and TXT files work fine but LIT fails (thanks Microsloth). Having compiler issues (can't use malloc for some reason). If anyone can get me some C code for a find/replace on strings that I can make work, it would be helpfull.
BTW, I've moved my MediaMonkey.ini into the MediaMonkey directory and made a copy called MediaMonkey-eBooks... now I (after modifying the second ini) I have two separate instances of MediaMonkey, one for music and one for eBooks. things are looking up!