@Racks I ran into a similar situation almost where I could not get my Nook to register anymore either. To correct this is what I ended up doing and maybe it will help you out on your wifes Nook seeing as it sounds like she wants it running the actual Nook software. Once you get hers gong I'm sure you can do what you wish with yours and not have an issue
So here goes. First thing I did was go to the B&N site and changed the password for my login. That way I knew when I redid the Nook I'd have updated info on there end already to make sure nothing was happening or corrupted on the device as it would force me to reset the device. After doing that I tried a bunch of different restores and had no luck. Low and behold I ran across this thread (
http://xdaforums.com/showthread.php?t=945838) and followed the instructions. FYI I had a extra sdcard so I set that up specifically to try to restore my Nook so nothing else would get messed up from my prior backups and stuff. After downloading the file in that link and burning the image to the sdcard I booted the device off the sdcard. First thing I did was formatted /system, /data, /cache, and then wiped davlik. After which time I did the install like the link says. Once it was done powered down and removed the sdcard. Fired it up and followed the Nook Quick setup and all was good to go again.