Yeah, that definitely looks like an USBMS-induced filesystem crapfest (FAT32 is the worst). An update will *never* touch your settings. (Nor would, to some extent, a simple KOReader crash: at most you'd potentially lose whichever settings might have been touched in *this* KOReader session; i.e., nothing if it crashes at boot).
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I fixed the OCP KFMon package to leave configs alone in the most recent updates, thanks for mentioning the issue

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