which sentence is correct?

When you are preparing your exam, you should do more than just reading books

is correct.

It depends on the situation and what you want to say, it can be either noun or verb after just, or even adjective. There is no fix rule on that. But in this case, it is "reading books", which is a noun, should be used in here.

It has nothing to do with 'just'. The word in focus should be than.

I prefer 2.