Ok I got annoyed, so I figured out a workaround, here it is if anyone is interested:
I decrypted (removed the DRM) the ePub files that I had bought from the Kobo bookstore. I used Python and PyCrypto to do this.
Once I had a DRM free epub file of the books I bought I simply copied them into the root folder, ejected my kobo, and now the books show up on the device no problem.
This has the benefit of being able to skip all the dumb/buggy software, I'm going to continue using this method until Kobo people give us decent software updates. I do not advocate piracy though, people should still buy them before decrypting, its important to support the authors.