Thanks for the reply, but as I mentioned in the description of the problem I have already tried a basic reset (Kobo Mini FAQ calls paperclip-in-the-hole a basic reset, see here:
http://www.kobo.com/help/kobomini/re...id=3733&type=3). It did not help.
Furthermore, I have noticed that not only is Factory Reset button greyed out, Sign Out button is also greyed out.