Wired keyboard up arrow not working in finder

My keyboard has all of a sudden decided to, for lack of a better word, spaz out!

I have a 2011/2012 21.5 inch iMac (intel), with a wired keyboard (with numerical pad) and mouse. When I'm on the desktop (finder) and i select a folder, the up button on the keyboard moves 'down' (one folder) and then won't move again. The down button and sideways buttons work fine, and it appears all the other keys do to. When I go into a program like safari the up arrow works fine, I can scroll pages up and down without a problem.

The issue first began when i was working in indesign, and I went to the text palette and tried to manually tap up the point size, but instead it opened the swatches palette, and I couldn't understand why the up key wasn't working. I quit indesign and as this was happening I was doing something in the finder and noticed the problem there too.

I shut down all the program's and restarted. This didn't work, so I came exploring on apple discussions. I rebooted the computer in safe mode but that didn't work either. I searched in library > preferences for a com.apple.finder.plist (as I saw this mentioned in some discussions) but there was no such file living in the preferences.

I'm really not sure what to do to rectify this.. If anyone could help that would be super awesome! Thanks in advance!

Penny