Disclaimer: I haven't received my Step I score back yet, but was scoring in the high 250's on practice exams.
The most important thing I did during the year to prepare to Step I was honoring my classes in M1 and M2. Really knowing the stuff. And this doesn't have to involve sifting through textbooks (although a lot of people do swear by Medium Robbins). My school has pretty good notes for most lectures, so they were my primary study source.
Trust me when I say that busting your ass during the year is the biggest favor you can do for yourself. I know other people are different and all, but there's little room to argue that mastering the course material overall is key. People tend to think that if a fact doesn't appear in First Aid, it's not testable on Step I. I got plenty of questions right during my time with UW (I don't recall a lot of specific questions from the real thing because it's all a blur) that I only knew because of course material, since it wasn't found in FA. Mastering the material as a whole first, and THEN worrying about the nitty gritty details in FA was my approach. I was scoring very very well early on in my Step I prep without having even gotten through much of FA.
The best piece of advice I got about pathology specifically was "start reading Goljan RR Path from day 1 and keep up with it." It's a good book, and while not necessarily a good place to begin studying, it's very useful to read after you've already begun to learn the relevant material.
As for annotating, I'd probably focus on adding bits and pieces that help explain a concept/sentence in FA that maybe doesn't make a lot of sense on its own. Try not to overload a section with facts from class. I look back at my FA and laugh at some of the hilariously useless facts I added in for particular topics from my coursework. It's very difficult to get the big picture as far as what things to focus on until you start focused Step I studying, or at least until you begin a question bank.
Speaking of which, it's not a bad idea to purchase a year's subscription to Kaplan or USMLERx and follow along with relevant questions as you go throughout the year. I didn't do this but kind of wish I had. I did buy Kaplan in Feb and slowly worked on it (very slowly) from Feb to May.
Bottom line: don't fall for the "oh I can just blow off class and review M1 material and then blow the boards away in June" line of thinking. I'm not about tooting my own horn, but I began in May with a 236 before even beginning my dedicated study prep, and this I attribute almost entirely to my hard work throughout the two years and my mastery of the material. Before that, I had spent a couple months (since Feb) slowly reviewing some M2 stuff I was shaky on, as well as hitting some biochem so it all didn't seem foreign and scary to me when May/June rolled around. This was actually very helpful for me, since I'm weak on Biochem and FA's biochem section seems very disjointed, with subpar explanation on many topics (for me at least). But I wouldn't go nuts necessarily on that front. Either way, it's probably a lot more stressful to climb your way up to [insert goal score] from a beginning practice score of 190. People do it, definitely, but it takes a lot of hard work.
I'd take a look at the Taus method thread. It's a good study approach for many people, and incorporates some dedicated studying beginning during the latter part of your M2 year. Also, Gunner Training seems like a good program, although I wasn't fortunate enough to know it existed until it was too late. AggieSean used it all throughout M2 as sort of a low key way to keep things fresh, and it sounds like it worked for him.
As far as books, here's what I used during the year:
CMMRS
Lange Immuno/Micro
Lange Pharm
RR Path
BRS Phys (to review relevant physiology before beginning that section in Path, which I definitely recommend)
During Step I studying, I used these books as well (although most of them were just to refer to specific topics . . . but, I did read RR Path and BRS Phys again in their entirety during this time). I also used Kaplan Biochem notes and HY Neuro.
