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Kobo has several partners, each of whom have their own websites for selling books that are variations of the kobobooks.com website. Each site has separate "I'm Reading" and "Purchased" records tied to the user, and, if you remember, you had to sign up for each site separately.
The sync operation will work with any of these sites, but will ONLY sync properly with the books you have purchased from one site. People who wish to buy books from Kobobooks.com and Borders, or Borders and Whitecoulis, for example, have to decide which site they want to use for syncing and which site they will buy books from in ePUB format and then sideload through ADE or Calibre.
Fortunately, you didn't lose any of the books permanently. Decide which of the bookstores you will be using to sync with. Then go into the "Purchased" list on that site and bookmark the books you wish to download and manage through sync. Update your desktop and sync away.
Then go to the 2nd site (the one you will NOT be syncing with) and download ePUB versions of your purchased books from that website. Transfer them to your Kobo using ADE, Calibre, etc.
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