The problem is caused by a firmware update. The image has an earlier firmware on it. After restoring the image, you need to prevent the upgrade to the later firmware version. Connecting to the Kobo desktop will do this. If it is like the later devices, you need to let the desktop do its stuff, and then before ejecting the device, remove the KoboRoot.tgz file from the .kobo directory of the device. The may also be a directory call "update" and an md5 file. These should also be removed.
But, a warning: I don't have a WiFi, so I haven't done any of this. I would recommend reading through the thread I pointed to do check the details and for any other suggestions.
Otherwise, I would recommend a Glo HD. They are a very nice ereader.
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