I moved to Mobipocket Reader (Pro).. the basic reader is FREE so you can certainly use that
http://www.mobipocket.com/en/DownloadSoft/default.asp
Their books are in .prc format, and many others I have found use the same format.
The product I found to convert LIT (MS Reader) to PRC is called ConvertLit
http://www.convertlit.com/ (FREE) or the GUI interface which is much easier
http://www.hot.ee/dukelupus/ also FREE
GUI Direct:
http://www.hot.ee/dukelupus/ConvertLIT.htm
Very easy to use, it creates an HTML directory and then you just use MobiPocket Publisher (FREE) to create you own PRC book. Total conversion takes under 2-min complete from the time you start using the convert lit tool until the time MobiPocket Publisher creates the PRC file. Nice if you want to avoid MS Reader at all cost.
I have installed MobiPocket on my 1GB Microdrive and it works well, dumped a bunch of books in the eBooks directory on the Microdrive and it auto-picks up all of them.
Could not be easier, well I guess it could, but after all the OS is still windows based, so there has to be some work involved.