"When marking a message as read, Google Reader gives me the message 'Oops...an error occurred. Please try again in a few seconds.' . It occurs both in Firefox & MS Explorer. "
Yup, I'm having the same problem! It started last night, and I even tried switching machines, and wireless network. Something is definitely up with the service.
I'm switching to netnewswire for now.
Update: A google reader engineer left a comment that it should be fixed now. Sure enough, it is. Nice service! :)