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If the problem is solved by the Giorgio's unmodified port of Koreader, you might want to try doing the factory reset, then updating to the current Kobo firmware, then installing the launcher of your choice, then doing the Koreader install form post #1, then doing any modifications one by one. There are a number of them described throughout this thread. Perhaps there is something in the mods or order of their application, in Markismus's 1 Step Hack that is reacting with something on your Touch. Doing the mods one at a time might let you see where the problem gets introduced.
The "1 Step Hack" is a great convenience, to those of us that use it with no problems,
as it incorporates a number of separate mods and hacks as well as the two major programs, Giorgio's port of Koreader and Sergey's Launcher with USBnet. It may be reasonable to expect that there will be some who will want or need to follow the more "official" path of the individual installs.
Luck;
Ken
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