Type "devmodeon" in the Kobo search bar. It will return a "No results"-type page.
Then, telnet to your Kobo's IP (keep the Wi-Fi connection dialog open so it doesn't turn the interface off). Issue this command and tap a bit on the screen:
Code:
evtest /dev/input/event1
Interrupt the program with CTRL+C. Post the output here, then unplug the USB cable and try the same thing again. Post the output.
This will allow us to tell if it's more of an hardware or software error.