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The message should not say to format but rather to check the drive. One friend of mine is having a similar issue with his Sage and our workaround after reporting the issue to Kobo is to use a NickelMenu item to reboot his Sage before connecting to his computer. The Sage runs dosfsck against the FAT32 partition as part of the bootup.
OTOH, what he is seeing does not quite match what you are seeing. For him, when he connected and got the popup about an error on the drive, calibre also complains that the Sage's database is corrupted. He then copies the last backup of the database into place before ejecting the Sage. While this may lose him up to 24 hours worth of imports/reading stats/whatever, he has not had his books moving around or being removed though that may be due to the database corruption not being corrected on your Sage.
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