Kobold origins in German folklore are basically house or mine fairies/elves/dwarves, with neither dog-like nor dragon-like appearance.
"Gnome" is the name given by the medieval physician, alchemist, and philosopher Paracelsus to the most important spirits of the Earth. According to him, they had a misshapen appearance, live in the earth, guard treasures, and move through earth and stone like we walk around on the surface. Sunlight turns them to stone.
So, what you're telling me, is that the Gnomes are also in the process of rewriting the historical record, but haven't been nearly as successful as in D&D?