I don't recommend the literature one at all. It has some of the most obscure words you'll ever see, and uses old kanji that you don't need to know, and old readings that will confuse you. The actual format of the book is great for anyone at lower intermediate and above, but the choice of text itself is anything but.
Personally, I think reading too early can be more effort than it's worth. If it's taking you 10 minutes to read one page of a book, then you could probably be spending your time more efficiently. I started off with Doraemon, but that might be a bit below you now, although there are still loads of useful expressions and grammar examples in there. If you get Rikai-chan, you can browse the web for something suitable to your level, and easily look up unknown words and save them to a list.
If remembering kanji and how to read words is the problem, then check out something like Anki or iKnow. iKnow has a 6000 word flashcards set with sentences and audio and uses a special kind of system that helps you memorise it. I'd recommend Heisig's book for learning the characters, but it might be difficult to use if you're struggling to keep up with what your teacher is telling you to do.
I've seen a lot of threads with recommendations on this forum
http://forum.koohii.com/index.php If you try searching a bit, you should find some good links to online stories. You can also find out more about Anki, Heisig and just about all aspects of learning Japanese.