Triffids, did you eventually solve the problem with your Kobo? I had the same problem after I loaded a few ebooks on to mine (using Calibre).
Initially I thought this was a problem with one of the epub files, so I deleted the book - problem was still there. Deleted ALL the epub files on the reader - still hanging.
Finally, in desperation I looked at the drive - noticed there were still four epubs (or remnants of these) on the Kobo. (They did not show up in Calibre or ADE.) I guess the Kobo was trying to process these files and failing, as they were corrupted. I deleted them and voila! Kobo processing is going as expected again.
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