I've got the same problem.
i connected the kobo to the PC for the first time after downloading kobo desktop the pc and kobo desktop recognised the kobo touch.
Kobo desktop then did an update to the kobo. Following this when i connect the usb cable to the kobo the option to connect to PC flashes up for less than a second then disappears not giving me time to select connect!
I've tried a different usb port, turning PC on/off.
anyone else having this problem or got a solution??
Oh and as i've just joined Hi to everyone
