Hello: I just downloaded a new book to my IPAD2 and the book is showing up but getting a message," Cannot open, it is formatted incorrectly, or is not a format that IBooks can open". Any help?

Delete it and redownload it from the purchased option in the iBooks store.

If this doesn't help:

Select the content which is causing a problem and use the 'Report a problem' button in Your Purchase History.

Would you happen to know if deleting and renown loading it would cause my edits and notes to disappear?

Oops, should have proof read: 'renoun loading' = re-downloading