Doing a firmware downgrade without a factory reset isn't really supported. It usually works if you are just going back a couple of recent versions, but, going back to the original firmware probably won't work.
To get back to the original firmware, or a much earlier one, the method is:
- Do a factory reset using the buttons.
- Use the Kobo desktop to setup the device.
- When it prompts to eject the device, DO NOT.
- Remove the firmware update files from the device. Or, replace them with the firmware version you want to use.
- Eject the device.
- Turn WiFi off and do not do a sync or it will update.
I wouldn't stick with the factory firmware. At the least, you should use the first version after the device release. But, I'd probably use the last version that has the home screen you like.
And for the record, the original problem sounds like a corrupt database on the device. The only solution is to force a rebuild of the database. With the firmware you had, you would have needed to sign out of the Kobo account and back in to fix this. And that would have triggered a firmware update.