Hi Lance--if you look at your purchased books list on the kobobooks website, you will usually see a button to download ePUBs. ePUB formatted books, except those sold without DRM, have to be opened and transferred to your Kobo through Adobe Digital Editions software. It comes preloaded on your Kobo--or you can download it from here: http://www.adobe.com/products/digitaleditions/
Try it. If the books do not transfer either through sync or as ePUB loaded through ADE, it generally means that your database is corrupted (doesn't happen often) but it can happen. Many people really prefer the ePUB format and never use the sync function at all. Calibre
is another piece of software that folks use to manage their libraries and transfer books to their readers. You still would have to open with ADE, but then you could transfer the books into Calibre where they can go onto your reader.
The one time my database actually was corrupted, books would not appear using either sync or ADE, but were fine when added through Calibre.That was when I replaced the sqlite DB and the image folder using the process listed in the sticky at the top of the forum.
If this seems too weird, and you are in Canada, go to a local Chapters store and ask them to flash your reader with 1.4. That will give you a truly fresh install and you can go from there.