**IT IS** in the 'Diags' operating system!
That is why the password given by kindletool worked.
Now that you have the 'Main' operating system's root file system mounted at /tmp/main
Edit the file: /tmp/main/etc/passwd
to make the second field of the 'root' password empty.
From
root:!: ..... whatever
To
root:: ..... whatever
Now, when you do start running the 'main' os - the login for user 'root' is blank - just press enter.
In this case, your Kindle is depending on the physical security of the USB cable (or serial port cable).
Probably a safe bet that no one is wire tapping those without you noticing.