I had this recently, but I was on 1.0.5 and stupidly installed adb for 1.0.4 which gave me the USB freezing issue. For me, it was as easty as using restore-set-1.0.05.11130-us
But you are on 1.0.7 so you will have to downgrade:
http://community.sony.com/t5/Reader-...re/td-p/460702
Alternative, more detailed, instructions:
https://www.mobileread.com/forums/sh...4&postcount=18
Also of interest:
https://www.mobileread.com/forums/sh...d.php?t=249859