I have been using an 8GB SDHC card with zero issues in my Original Kobo. I put zero side-loaded books onto the main memory, and while I used Calibre to convert various documents into epub format, I did not use Calibre to copy the files onto the Kobo. I simply put the SDHC card into my reader, plugged in to my computer, and did the standard file copies as if it were an external drive on my computer.
Mind you, I have used less than 1GB of space out of the entire 8GB. Mostly free books from a promotion Tor had a couple of years ago, plus pretty much the entirety of the Baen free CDs, both either their original epub files or else mobi files converted to epub via Calibre.
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