I use iTunes v10.4.0.80 and Overdrive v3.2.0.5 (just as you do) with Windows Home Premium 64-bit. I kept the 4 minute "Welcome to Overdrive Media" wma audiobook that came with Overdrive and just transfered that again to my iPod Nano 5th Gen and played it with no problems.
The problem isn't with all installations of our versions of iTunes and Overdrive. Rather it seems to be with just some installations. The two in this thread are the first such problems of which I've heard.
Have you checked to see if the WMA audiobook you are trying to transfer is authorized for transfer to portable devices? Many are not. The icon indicating portable device transfer authorization is reflected in the audiobook library listing as described in the "How to Transfer to a Portable Device" tutorial in the Overdrive Media Console Guided Tour (videos) at http://www.overdrive.com/Solutions/Libraries/tour/MenuWelcome.html.
Forgive me for restating things you may already know, but the portable device must already be plugged into iTunes and, when you highlight the mobile device in the left hand menu of iTunes, the "Manually manage music and videos" box must be checked in the Summary Tab. At that point, selecting a book in the Overdrive Media Console and clicking the Transfer button should begin the process of format conversion to the portable device.
Other than those, I am out of suggestions.
