The problem lies in the Nook programming and there is simply nothing you or B&N support can do for you until the problem is resolved with forthcoming updates (if ever).
I know this because I have 4,160 books in my account (yes, four thousand and no, most are not free, I spent apx. $9,000+ on these books and still can't get my problem resolved just like yourself) and I have gone thru this problem with support much further than you (including a new Nook which needed to be replaced anyway due to cracked button).
The problem is not the storage available on Nook for your books as Nook only automatically downloads newly acquired books (in my experience up to about 2-3 days old) or five newest books if there was no new purchases in past few days.
The 2 minutes to sleep (or title/main screen) problem you are experiencing is because your Nook times out and gives up on trying to download your library LIST. The problem you are experiencing starts for most people after they acquire apx. 600+ books but it is kind of random. Farthest I have been able to go is 1250 items. Archiving does not work because even tho you archive the books the information about them is still being downloaded to Nook whether the book itself is or not. Hiding archived items does not help as hiding is done locally on Nook.
So here is what the problem is: Nook tries to download the library information for your 950 items. Each item has a title, each item has a cover, each item has a description, etc. All of this is being downloaded to Nook and due to programming issue Nook times out and sort of "resets" itself. With my 4160 item library just the LIST (metadata) for all of these items could probably take easily 100MB+ (well, maybe that is an exaggerations, but you get the point). Nook is simply not capable of dealing with this much data at this time.
This needs to be fixed, period, as more and more people will start having their libraries go into hundreds soon enough and then this will become wide spread problem that may actually greatly hurt Nook success.
This issue also appears with newest Nook PC Reader (at least with my 4160 items), however the old version works fine (albeit it takes a while to check/update content) and that is what I now use to download/archive my books and then I simply drag/drop them to Nook from PC Reader directory as I read them. I suggest this is the best way for you to proceed, with your 950 items the new reader should work fine (my quit at apx 3500, so I had to get the old one).
To summarize: this is a PROGRAMMING issue that needs to be fixed in next updates (hopefully very next one). Perhaps by not downloading all the information about an eBook (ie no cover and description until item is accessed and then downloading it on demand for those with large libraries).
P.S. I have been told my library is the largest. In fact, while the support tried to access my transaction history it crashed their computers! After many weeks of going thru support/content/engineering departments my case was forwarded to engineering/programming teams. If they will be able to fix it for me, there is hope for you yet.
I also stopped spending large amount of money with B&N until this is resolved and basically just buy very cheap or sale or to complete series.
Also last note: If you have access to or can borrow and old Nook with 1.0 or 1.1 software revision it MAY (just may) be able to access your library. Some people with this problem had success by going back to old software but you cannot do that if your Nook is one of the newer hardware revisions as those need V1.3 or 1.4 to works properly. So don't try it at home or you may brick your Nook.
P.P.S. On another note, to avoid my Nook from "resetting" itself every 2 minutes I keep it permanently in airplane mode. Sideloading will be your friend with this problem. First time you open your books it will ask for your name and CC info then it should remember it. Just side load your books that you download using Nook PC Reader (or from your library page using browser) to My Documents folder.
