Sounds a lot like the problem I've been having on my Kobo Touch - books appear to load fine in Calibre, you can see them in the root directory on your computer, but they don't show up on the ereader and the "Processing" screen stays on forever.
See if there are two files named "driver.calibre.exe" and "metadata.calibre.exe" in the root folder of your ereader. I found that Calibre was downloading them automatically and when I delete them everything works fine (and no formatting issues appear so I'm not sure what the files are really for). Try attaching your Kobo, loading a few books and deleating the two Calibre files (if they're there) before you eject the reader, it worked well for me.
Goodluck!!
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