At the moment, there is a problem with the 398 version of Giorgio's port and he has removed it from the first post of this thread.
After your step 1) you should have safely disconnected your Kobo from your PC, and then you should have seen the Kobo device display that it was updating. Once that has finished you needed to reconnect the Kobo device to your PC, then safely disconnect from your PC. (These steps insure that the .png image files are properly indexed by Kobo's Nickel program.)
Installing Koreader would be next. First you need to know which version of the Kobo Firmware you have installed. Then you can select the proper version of the port to install. If you have version 2.6.1 or later, you might want to wait until Giorgio posts his fixed version. Or you could look back in this thread and find Markismus's latest "1 Step Hack" and try that approach. It won't have Giorgio's latest improvements but includes a number of hacks/settings from several posters that are quite nice.
Luck;
Ken
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