For those who want to use Windows built-in tools to reformat their Kobo touch screen ereader to allow using it under Windows 10 Anniversary release, the following procedure worked for me.
- Connect your Kobo to another system (or your Windows 10 system before applying the update) and back up the contents of the internal storage
- Connect your Kobo to your Windows 10 Anniversary system and open Disk Management (easiest is likely to search for Disk Management or by right-clicking on Start, opening a administrator command prompt and entering diskmgmt.msc)
- Select the unallocated space and create a simple volume, select the full size of the free space, assign a drive letter, format the partition as FAT32 with the default parameters and a volume label of your choice.
- Close the Disk Management console and check in Computer to see if the drive can now be opened. On my test, it came up as requiring to be formatted again so went with the same size/volume label.
- Restore the contents of the internal storage that you backed up earlier.
- Enjoy.