I guess, the device reboots before you are back in KSM. If there is a KoboRoot.tgz in .kobo, this is exactly what happens.
If your case is different you can try starting nickel via telnet and see whether the messages can help you.
Code:
sh /mnt/onboard/.kobo/kbmenu/onstart/startreader.sh
Loading of lowmem.ko will of course fail, until you define and export PLATFORM. But this should not be a problem.