KSM8 is installed with it set to alternate between starting in the KSM menu or in Nickel. This is explained in the box on the first page,
of this thread. The screen with a list of options, including "start nickel, and start koreader" is the KSM Menu, not KOReader's.
Yes, KSM can be setup to switch between KOReader and Nickel, but you might want to first get it working where you go through KSM to launch KOReader or Nickel.
KOReader starts in its File Manager at the default location /mnt/onboard/. From there you may have to navigate to where you have your ebook files stored.
You are only supposed to have the message box with the option of copy, cut, delete, if you long press/hold on an item listed. Just tapping on a listed item should open the file/ebook or navigate the file structure. (Which KOReader version are you using? There was once an issue with a long press being detected when a normal tap should have been.) You might want to try an earlier or later release of the Kobo version download package.
Luck;
Ken