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Kobo's handling of annotations and highlighting is abysmal. The former is so hard to do on the slow E Ink keyboard, I almost never bother. For the latter, though, I've long used this system. Since I have a Sleep Cover, the power switch is no longer needed, so in "Kobo ereader.conf," I have this line:
Screenshots=true
I then highlight any passage I wish (or not, if I want a whole page) and take a screen shot by pressing the power button; these are saved, one per screen, as .png files in the device's root directory. When done with a book, I copy all of those files into my Evernote account.
Evernote automatically performs OCR on the screenshots -- and it works just fine, even if some or all of the text in the screenshot is highlighted and/or is in italics -- and makes them full-text searchable. I then use Evernote's search functionality to find highlights I want across all my exported highlights from all books.
A sample is attached; as you can see, this method preserves the highlight and the appropriate citation: the work it came from and the place in that work.
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