OK--I am confused. When I choose update library from the Kobo WiFi running 1.7.4 all it does it check for changed bookmarks. It did download books that were bookmarked in I'm Reading on the desktop or the I'm Reading page on the Kobo site the first time I did it, but after that, nope. Update library works exactly like it has in the past.
Did you shut off the reader in between the times you updated? The processing thing that happens every time you start the reader up again seems important for many different things.
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