Thanks for the quick response.
What I think is happening is that It is going through an iterative process... When I connected and reconnected the device several times it worked....
first connection the books were sent to the device but no shelves, the second time shelves were created but with the letters issue, the third time the shelves were corrected. Each time I added a few more books..
I would do more testing (by deleting entire library from the Kobo and starting over) but I am going on vacation this evening. I can try upon my return.