You're using the built-in PDF reader. If you want to do highlighting, you need to use the Adobe Reader. You can download the app for free from the Kindle store. Unfortunately, it's not easy to get the Adobe Reader to read and save your documents. The built-in reader opens all PDF documents by default, and there is no way to change the default. If somebody from either Adobe or Amazon is willing explain how to use the Adobe Reader on Kindle, I'm all ears.
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