Have you tried turning off your Kobo (the button on the top) and turning it back on? If you are really at sea, you may need to turn the device over and find a paperclip to "reset" the device -- you'll see a small hole on the back near the base.
Have you installed the Kobo desktop software yet?
Plug in the Kobo and in Vista using Explorer (aka File Manager) find the drive marked "Kobo" -- it's likely D, E, F, or G. Inside, you'll find a Window folder under Desktop Installer. Allow that to install -- it creates an interface between you and the Kobo store (don't worry, you don't have to buy anything).
Next, install Adobe Digital Editions -- ADE -- and create an account there. It's based on an e-mail address you supply and registers your Vista computer; again, you don't have to buy anything.
With it running, plug in the Kobo with a USB cable ... ADE should recognise your Kobo. Using the Library "Add books" feature of ADE, add all the Gutenburg ePubs you want. You can also add purchased Kobo books and library books. Anything in your Library can be dragged to the bottom left corner marked "Kobo Reader" (as long as it is plugged in). You also use this tool to delete anything on your Kobo you added through ADE.
There is no need to "manually" add titles the way you have.
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