There is currently a problem under FW 4.2.8283 that prevents KOReader from running after nickel has run (cf.
here). From your description however it seems that you tried to start KOReader without nickel having been running in the same session. So your problem might not be related to the new firmware.
As to your problem with the pngs, are you sure that the folder kbmenupngs is at the correct location? And that there is no second folder with the same images in it on the device?