I'm using a 2GB SD card (not SDHC) on a Kobo wi-fi and I do find the firmware to be buggy in that, if there are any damaged *.epub's on the card at all the device will go partway through "Please wait while your Kobo eReader processes GNU content" and then reset on basically an endless loop.
In my case, the error (which the Kobo does not explain to the user before rebooting endlessly) was a damaged "invalid zip file" (an .epub is a zipped web page wrapped in some xml, so a damaged file won't even unzip).
The same file in main memory would likely just cause the scan for new books to silently terminate prematurely, even if that leaves hundreds fewer volumes on the device's 'books' menu than appear in Calibre or on a desktop PC's file manager.
It would be preferable if the firmware were changed to detect a damaged file (oh look, it's "Touring the Onondaga Parkway - by Megabus Inc.epub"), flag just that one .epub as smushed beyond repair and skip it instead of breaking the entire scan for new .epub's. Unfortunately the current (1.7.4 wifi) Kobo isn't quite that clever.
Have you tried taking a 2GB card, putting one lone *.epub file on it and seeing if at least that much is correctly recognised? If that much is good, then you could try adding more to see where or when things start to break.