@Sir Alex: I just learned about the USB descriptor after NiLuJe's last post in this thread. I keep my kindles in usbnet mode, and I use scp (or WinSCP when I need to copy files using Windows). I will switch one to USB Drive mode and try KDT again...
Yes, KDT works from USB Drive mode. That explains why it did not work for me. I just learned something new.
I have a question though. You show a recovery password with an extra character. To login over Wi-Fi, the root password is fiona+3 characters (not 4).
I have seen inconsistent information in the forums. Does the recovery password have an extra 4th character from the serial number MD5 (that the root password does not use)?