Just answered a similar post, so same answer here. I'm afraid I'nm not at all wure it is right, thought ...
It's possible that you have reached your authorization limit (6 devices), and that it is giving the wrong error message.
You could try contacting Adobe and getting your authorizations reset, but then you will have to reauthorize all other devices.
Adobe Live Chat: http://www.adobe.com/support/chat/ivrchat.html
Another possibility is that there is some password or userid case sensitivity issue that the Bluefire app is getting wrong.
I have a vague memory that someone had a similar issue on the iPad, maybe with Bluefire.
You could try installing Overdrive or Aldiko and authorizing that.
I think the authorization is done by the app but is for the device, so probably if that works, then Bluefire will work.