I had this problem connecting to our WEP-encryted network. I knew the 26 character password wasn't the problem, because my husband was able to connect with his Kobo.
What worked for me was doing a factory reset of the device (under advanced settings.) This will reset your device back to out-of-the-box condition and you'll have to add your books back to your Kobo. For some reason, after doing that I was able to connect to our WiFi.
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