My new kobo arrived today. This is really good service from kobo! No problems.
Didn't even need to give them a CC number ... guess they know I'm very trust-able
So, after getting new one charged, updated and registered I plugged my old and the new into my computer. Copied all my books and the sql database to the new one. Unplugged and everything is back to where it was. And no overnight delay while updating the database either. Very cool.
I have to assume it was a dead sensor. All works just like it should now.