Success!
With the wireless software update not working, here's how I updated the Literati firmware from v1.6 to v2.0 (r23523, Jan 19 2011). Much learned from
here and I played with the url to get the latest version:
1) Right-click on the following link, and "Save Link As..." to your harddrive, keep the filename the same. (~60mb)
http://download.kobobooks.com/firmwa...0/KoboRoot.tgz
2) Copy this file "KoboRoot.tgz" file to a blank SD card, then insert card into Literati when powered off.
3) While holding down the "Q" key, power on Literati.
4) And WAIT.
It should soon say device is updating software. It will reboot itself, and after about 10 minutes or so, it will display the setup screen, where you enter the date/time etc.
***Be sure to use the power cord or have plenty of battery life. Running out of juice while the software is updating would brick the device.
Good luck.
Btw, fwiw if the idea hasn't been mentioned...I always put my books on a
class 10 sdhc card (the fastest rating at this time.) It's read/write speeds are much faster than the main memory (and other slower class sd cards), so opening books and page turning etc. is much faster.