Peter is right
.
Anyone using Kobo WiFi or Kobo-1 (any version above 1.4) will have kepub files. People with Kobo--1 who have updated through the desktop will continue to have the preloaded books in the sqlite directory. Doing the replace sqlite directory bit from the sticky will result in the preloaded books being in kepub format.
C:\Users\username\AppData\Local\Kobo\Kobo Desktop Edition\kepub only has the files that are currently on the shelves in the kobo desktop application. If you remove a book from the app, it will also be gone from the file. You can use something like Allway Sync to create a backup through synchronization of any kepub that ever appears in the desktop application. Allway has a setting for a one way sync without "deletion propagation".
For Windows 7 Users: it made sense to me to create a "library" with the locations of the various ebook related files in it. Mine has the directories for ADE, Kindle for PC Books, Calibre, the kepub file Peter referenced, and the file I setup to sync using Allway. I also have an eread misc. folder.