I'm sorry this happened to you but glad you found out before turning the unit over to the buyer. You have me worried though. I bought one from Borders for the express purpose of reselling it. I have only ever had a Sony reader. I've never had any significant problems with them. I had a weird battery blip and then the silliness of the 300 library PDF/epub conflict but nothing having to be reset on a regular basis.
I watched the discussions on the constant firmware updates, the errors, the resets, the freezing, how they fix one thing but set back a few others and it worried me. I never bought it for me and wouldn't but when the price was right I did grab one for resale. It's enroute to Australia and I'm worried.
I don't think that the issue would be limited to Borders however. I think it's the luck of the draw as to which unit is going to crap out and which one isn't. I agree however with your comment about the person who slapped this crap together. I could be wrong but I'm fairly certain you weren't meaning the specific individual in the factory but rather the higher-up who condoned the creation of such a lousy device.
They put too much time into making it cutesy with the nonsensical Facebook integration for example rather than just making a good, stable reading device.