Keyboard issue on my MacBook Air

Computer started recognizing every keyboard character as <shift> / upper case. So I rebooted. Oops! Won't recognize my password. Tried to reboot with external Mac keyboard. Same issue. Keyboard entries not valid So, it does not feel like it is a keyboard HW problem. Tried PRAM reset. Nope, couldn't get it to take ...perhaps the P and R keys/

Do I need to do a command-R system restore? It may not even recognize the R key...

[Re-Titled by Moderator]