The following formats are supported out of the Box:

* EPUB
* BBeB Book
* PDF
* RTF
* TXT

In case you have eBooks in other formats - you will have to convert these. Best is the tool "Calibre" which runs under Linux/Mac OS-X/Windows using Python. However it will not convert all formats.
For all converting eBook's from other formats. I has avered that runnig the html-output through tidy - produces a way better output in LRF or ePub after it has been sanitized by tidy.

NOTE: Due to German Law, I am not allowed to publish the following tools here. Also - providing this information is just a hint for people like me, who buy their secure eBooks, and just want to convert these into a format suitable for their Reading Device !

For the special Secure eReader Format - you will need to find a tool called eReader2html (it's a python script). With this tool, you will be able to convert the Secure eReader format file into a HTML file, which can then be converted to the Sony PRS-505 native LRF format by using Calibre.

For the secure MobiPocket format, seek for mobidedrm in your favorite search machine. For this though, you'll need an ID which you can get by installing a mobipocket-reader software as found on www.mobipocket.com. Once the DRM removed, you can use Calibre to import it into your eBook library.

In case you are still uncertain as what to take, check out the WikiPedia E-Book Conversion entry.  

 Yes. Check out Kovid Goyal's libprs500 project supports the Sony PRS-505/500 and it's GUI frontend Calibre.
It has very good version tools allowing people to convert eBooks previously stored in HTML, PDF, TXT, Microsoft Reader (.lit), IDPF/Open eBook (.epub) into Sony's format, and with a little bit of search on Google - you may also find a converter for the Secure eReader format. 

 This is indeed possible. Check out the PRSCustomizer which allows you to partly modify the features of the PRS-505, and also add you personal Details to the About section of that device.

A more detailed information (in German language though) can be found in this Forum Thread. 

 Check out the Web Links, eBooks section.

For a start though, you can also have a look at the E-Book Uploads section from mobilread.com.

Google has also a book-search page. Check it out at the Google Book Search Interface

baencd has quite lots of free eBooks too. Check it out.

for the SciFi Fans out there - check out the following links:
http://www.suvudu.com/freelibrary/
http://craphound.com/novels.php
http://www.sc2.com/e-books/
http://www.ebookmall.com/categories/CATID35.htm
Especially - check out http://baencd.thefifthimperium.com/ - they have some promotional CD' s with really great stuff !!!
http://www.epubbooks.com
http://www.smashwords.com/ - Some free books here.

Some authors do put some of their eBooks online for free. This is a list of known sites - small so far, but maybe it will grow with time.

• Science Fiction - Jeffrey A. Carver (English)
• Science Fiction - Steve Jordan (English)
• Bizarre Stories - Collin Landis (English)