Updated and Regretted It!
I am having the exact same issue and instead of going through the trouble of factory resetting my blasted device I would just prefer if Kobo fixed the issue. I use my eReader primarily for .pdfs (academic papers) and this latest update has rendered the device entirely unusable for me (with term starting on Monday). I wish I could recommend my Kobo to others but issues like this FORCE me to tell others to look elsewhere! I am posting here in the vain hope that someone with influence will listen and fix a basic feature so I can at least use my device instead of glare at it!