I just wanted to add that I was getting many of the same symptoms as the others here, but when I went to the Keyboard & Mouse preference panel, the "Use the F1-F12 keys to control software features" checkbox was unchecked. Checking it reversed all the symptoms I was previously seeing such as, not being able to type in my password correctly, not being able to type any text input, hitting the command key and being asked if I wanted to shutdown.
I realize that this is counter to what some of you were describing, but it did solve my version of this problem. My USB keyboard and mouse certainly came in handy here, especially at the login screen! 🙂
Oh, I also was not able to zap the pram or the open firmware while experiencing these problems, and repairing disk permissions did not work for me although I did read that it helped others with similar problems.
Message was edited by: daqieq