For what it's worth, I just started buying used iBooks to refurbish. I tear them down to fix whatever is wrong. One of the first I bought had this horrible smell. It's bad enough to make you gag (and yet, I find myself drawn to it...). Anyway, I noticed that this smell was coming from the keyboard, and was also on the screen. On take-apart, I also noticed that the yellow thermal pad on the graphics processor had this smell also. The graphics processor is under the logic board, so not directly under the keyboard. As of yet I can't determine if this is coincidence or what. Two out of four bought systems have this problem. On advice here, I have removed the label from the back of the keyboard and that is definitely where it is coming from. Again, don't know what role the thermal pad plays in this, if any, but wanted to throw that out there.
500/600 Mac OS X (10.4.6)