That sounds like the database on the device is corrupt. The device keeps working from an in memory copy of the database, but when it should be saved and reread, that doesn't work. The save/reread should happen when you power off and on or connect to a PC. From what I have seen, after this, it can lose the updates and read an old version of the database, or not save at all and continue with the in-memory copy of data. Or it might prompt you to do the set-up again.
Instead of a factory reset, log out of your Kobo account on the device. This removes the old database and creates a new empty database. It will get you to login and process the books already on the device.