There is nothing important in the system/.assets folder, so this is definitely *not* your problem.
You may be better off by resetting the internal partition (/dev/mmcblk0p3). This will perform a reset "beyond" the normal factory reset. Note that it will remove your settings, but not your documents. Use the attached file (at your own risk!)
If you are still having problems after that, then it is very likely that one of your books is causing problems with the indexer.
PS: forgot to say: your device must be jailbroken
in order to install this, otherwise you will just get error 007.