The Kobo Wifi is on firmware 1.9. It should prompt you to update either when you connect to the desktop, or if you sync using the wifi.
You can check your firmware under the Menu button and then Settings.
If you are having issues (and if you want your free books back), also under Settings under Advanced, you can do a Factory Reset. You'll have to reload any other books back on, but it should solve your other issues, and should reload your 100 free books.
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