I have exactly the same problem. Did you figure it out yet? I have tried everything, including calling the help line for my Kobo, and I cannot read files downloaded from the library but, can read free books downloaded from Kobo.
I have now solved my problem. I re-read the manual and there is a trouble shooting section. It suggests that you check your date and time settings as this may cause a problem. Somehow my date and time settings on the Kobo had reverted to an incorrect date even though I had set them and when I changed them to today's date and time I was then able to view new files I downloaded to the Kobo. The files I had tried before did not seem to work ... so, I simply transferred them again and all is now well. Hope this works for others.
I had exactly the same problem - took some advice from another post and this is what I did
Shut down ADE
Reset the defaults on my Kobo.(under advanced you can reset to factory settings)
Started my Kobo up fresh and reset date/time etc.
Launched my Kobo app and resynced. - at the same time Started up ADE
- for the first time it actually asked me if I wanted to authorize my device (this had never happened on previous attempts)
everything works fine now.
My thoughts -
At some point the ADE had left some lingering presence on the Kobo enought to make it think that it was not detecting a new device.
Wiping out the folders and digital edition files did not seem to be enough to re-trigger the authorization code to ask me again (not that it ever had!).
Thanks ... it was in fact the date and time.