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I had the same issue but it may be related to a couple of wifi connections I had on my Kobo. I just returned from vacation an had used a number of wifi connections. When I tried to delete the connections, all deleted fine except two. Trying to delete these final two wifi connections caused my Kobo to hang. I also experienced the same "Network Error" message with the same behaviour (wifi connects-can browse-but cannot update). Of course, correlation may not indicate causality. This being said, a factory reset solved the issue.
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