Doing the factory reset isn't any big deal. It only takes a few seconds. That will clear all your books from the reader (other than the 100 free preloaded books). You will need to re-enter the data and time etc.
Then with respect to the desktop app, I would go to your Kobo Books account library and delete the books from your I'm Reading tab (the books will still be in your Purchased tab).
Then start the desktop app and Update Library and that will clear all the books out from the app. Then go to the Kobo Books library and put all your books back into the I'm Reading tab by going to the Purchased tab and selecting to Bookmark each one.
Then Update the Desktop App to reload all your books to the app and then Resync your reader to update all your books to the reader.