The answer is yes and no
. Sorry, not trying to be a smart ass, but there isn't a clear cut answer. Kobo has a Spanish/English and English/Spanish dictionary capability (not sure how good the dictionary is) so it technically can do what you are looking for. It will only translate one word at a time, so you can't highlight several words together and get a translation. I'm not 100% sure how it would work if you set the default language to Spanish, but if it is set to English these are the steps you would have to take to translate a word:
Select the word, select book icon at bottom of screen, select translate in the menu, select language to translate (defaults to English to French and that isn't changeable that I'm aware of), select Spanish to English and it will show you the translation if available. This process opens a new page so you can't see the word you are looking up in context while you are reading the translation.
So it does work, and depending how often you need to use it, it works well (I do occasionally use it, but only because I can -- if it was in a paper book I wouldn't be bothered looking up the words). If you want to do a lot of it it may be cumbersome.
Hope that helps.