Apparently a number of people have had this problem. Probably a re-install of the Kobo Desktop software will cure this.
If your computer still recognizes the Kobo (a Win 7 problem for some, I think), it should have a folder called 'Desktop Installers' which has Mac and Windows desktop software inside.
Failing that, you could try http://download.kobobooks.com/desktop/58/KoboSetup.exe
which many others have used.
He may have gotten an email from Kobo (I did, just today) which contains more info than I care to type here
Oh, about the recycle bin - he may have found the option to limit the book display to only his new books, or only the pre-loaded books. It's a bit of a trap!