There are two alternative/additional ebook reading softwares that can be run on the Kobo devices, which you could try and see if you still encounter the problem. You could even add both as they are launched from your existing Kobo software.
First I would add Sergey's CoolReader port which is included with his Launcher:
https://www.mobileread.com/forums/sho...d.php?t=222803
https://www.mobileread.com/forums/sho...d.php?t=201632
Then you could also add Giorgio's more mature Koreader port:
https://www.mobileread.com/forums/sho...d.php?t=216960 If you have the current Kobo Firmware you can get the latest Koreader build at:
http://code.google.com/p/koreader-pa...downloads/list Be sure to download the one with kobo in its name.
Both can be set to, or already does allow the reading of hidden files/folders. With your ebooks in a hidden folder Nickel (the Kobo software) will not see or process your books. Both have menus that you reach by tapping the top of the screen, Koreader has some (when in a book) reached by tapping on the bottom of the screen as well.
As you may have noticed, while some things seem to work across a number of the Kobo device models, for some of the devices, not as much. At least, if one of these work for you then a hardware problem is unlikely.
Luck;
Ken
PS; You could try making a uSD card with a hidden folder of ebooks, to see if that eliminates the problem, if so Nickel is the likely the problem and you may need to do a factory reset and/or reinstall the Kobo firmware. To make a hidden folder you name the folder with ".name." and the trailing dot will disappear leaving you with the ".name" that Linux will treat as hidden.