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Ensure that “EPUB” is selected in the top-right drop-down menu (this can be set to be selected automatically if you go to Preferences > Behavior > Preferred output format and select “EPUB” from the list).
After all books are imported (the names may be messed up, which is ok for now), select all new books (or just all books in library) and click “Convert Books” in the top menu. Then, complete this step by selecting your new folder instead of "My Kindle Contents". Then, make a new folder somewhere (say, the Desktop), and copy all of the recent folders (the ones you just downloaded) to the new folder. If you want to do this, you should open a new File Explorer window, navigate to "My Kindle Contents", and sort the contents by Date Added/Modified. If you only want to add a few books instead of your entire library, then it will be a little more complicated because all of the names are obfuscated (they're nonsense). Navigate to “My Kindle Contents” in “My Documents”, ensuring that “My Kindle Contents” is the selected folder, and select the “Select Folder” button. In Calibre, select the downward arrow next to “Add books”, and select “Add books from directories and sub-directories”. This must be done one-by-one, unfortunately, there is no way to download them in bulk. In the Kindle program, download each book that you would like. If this happens, then you can just reinstall the old version (keep the installer stored somewhere and you won't have to download it again), go through this process, and then reinstall again the next time you would like to update you Calibre library. A new policy by Amazon may also be forcing old versions of Kindle to update to the latest version (which means we can't remove the DRM).
You should be able to find a checkbox that lets you disable them in the settings.
EDIT: A final step in installing Kindle is to disable automatic updates. Just note the checksum and try to confirm it if you can (that will ensure that there isn't any malware). I don't want to link any, in case whichever link I post somehow becomes compromised. You should be able to find it at a number of different places around the web. You can google "download Kindle for PC 1.17". This process does not work with the new versions of Kindle for PC.
Download and install an old version of Kindle for PC. NOTE: At time of writing, DeDRM does not work with the newest version of Calibre (5.0), so stick to the latest 4.x version until you hear otherwise. Download and install Calibre and DeDRM tools. I wrote up this step-by-step guide for my girlfriend, so I figured I would share it here. This is probably retreading old trails for most people, but after a LOT of research, I wasn't able to find a single place that just listed all of the steps for importing Kindle books into Calibre.