Thanks to all for the responses. I resorted to doing another couple of factory resets. I also did a format of the SD card. (Thankfully I have all my books on my computer as back up) Things appear fine until I put the SD back into the Aura. Then the collections appear again!
I looked and actually installed the kobo utilities plug-in, but can not figure out how to do the collections. (I am no the most computer savy) Is there a step by step tutorial somewhere on how to use the kobo plug in?
Thanks again for all the help.