Hi Emma,
Unfortunately there is no way currently to reverse a firmware upgrade on the Hanvon N520, but you probably already knew that.
Is the ebook still under warranty? If so then your best chance is to return the ebook a second time and don’t mention your attempts to upgrade the firmware. It will invalidate your warranty – not that anybody tells you that. Get in contact with them, honey not vinegar works best. Then don't attempt to upgrade the firmware. As you've discovered it isn't totally compatible.
Your second choice is to live with it. Just dont turn it off too often. Use the lock function instead, if it still responds.
The third thing, and I dont recommend it, but it might be worth exploring, is to use Openinkpot, a open source e-book firmware. It reports its compatibility with the N520, but it is in its infancy. http://openinkpot.org/
(Requires linux or windows.)
Hope it works out,
Jon