I don't usually use the KoboTouchExtended driver and I don't think I have ever used the save copy option. It is supposed to work by saving a copy of the book in kepub format in whatever directory is entered. And if the no directory is entered, then it shouldn't save the file.
But, rereading you first post, I suspect the problem is elsewhere. You say you have "Calibre set to only send kepubs". How did you do that? Did you go to the list of formats in the driver configuration and uncheck everything except "kepub"? If so, that is the problem. That tells calibre to send kepubs from the library to the device, and if there isn't a kepub, then convert whatever exists to kepub. And after a conversion, calibre will always add the converted book to the library.
If that is what you have done, you should go into the driver configuration and on the first tab, select epub. This will mean the KoboTouchExtended driver will perform its magic on the epubs during the send rather than calibre performing a calibre conversion before sending the book.
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