Step 1: Draw a free-body diagram and resolve the forces.
The forces acting on the block are:
1. Weight $W = mg$ acting downwards.
2. Normal force $N$ acting upwards.
3. Applied force $F$ acting at $45^\circ$ to the horizontal. Its components are $F\cos(45^\circ)$ horizontally and $F\sin(45^\circ)$ vertically.
4. Static friction force $f_s$ acting horizontally, opposing motion.
When the block is about to start moving, the friction is at its maximum value, $f_s = \mu_s N$.
Step 2: Apply the conditions for equilibrium.
Vertical equilibrium: The net vertical force is zero.
\[
N + F\sin(45^\circ) - mg = 0 \implies N = mg - F\sin(45^\circ).
\]
Horizontal equilibrium: The horizontal component of F is balanced by the maximum static friction.
\[
F\cos(45^\circ) = f_s = \mu_s N.
\]
Step 3: Substitute and solve for F.
Substitute the expression for $N$ into the horizontal equation:
\[
F\cos(45^\circ) = \mu_s (mg - F\sin(45^\circ)).
\]
We know $\sin(45^\circ) = \cos(45^\circ) = 1/\sqrt{2}$. Let's use this value.
\[
\frac{F}{\sqrt{2}} = \mu_s \left(mg - \frac{F}{\sqrt{2}}\right).
\]
Rearrange to solve for F:
\[
\frac{F}{\sqrt{2}} = \mu_s mg - \mu_s \frac{F}{\sqrt{2}}.
\]
\[
\frac{F}{\sqrt{2}}(1+\mu_s) = \mu_s mg.
\]
\[
F = \frac{\mu_s mg \sqrt{2}}{1+\mu_s}.
\]
Step 4: Substitute the numerical values.
Given $m=\sqrt{2}$ kg, $g=10$ m/s$^2$, $\mu_s = 0.25 = 1/4$.
\[
F = \frac{(1/4) (\sqrt{2})(10) \sqrt{2}}{1+1/4} = \frac{(1/4)(20)}{5/4}.
\]
\[
F = \frac{5}{5/4} = 5 \times \frac{4}{5} = 4 \text{ N}.
\]
\[
\boxed{F = 4 \text{ N}}.
\]