I saw something in the Resources section that may help. Under Resources (between the Forums and Shopping tabs above) click on Downloads, then Axim Updates, scroll down and you will find the following:
Microsoft Reader 2.2.2
Description: As of August 26, Dell Axims were being shipped with Reader 2.2.1 and if you try to download a book to read on your Axim you get an error message: "Microsoft Reader is no longer able to access the book." You'll need this downlaod to upgrade. Afterwards you need to activate Reader if not already performed at
http://das.microsoft.com/activate/en-us/default.asp?&
Version: 2.2.2 Filesize: 0 bytes
I'm no expert. I just purchased an X3 this past week and have experienced the same problem. I found the above, but haven't tried it yet.