More info might help...
Have you tried other keyboards? (I know it sucks to go give up what you are used to). Is that a ps2 keyboard or a USB? If you ssh into the machine from another station does it behave ok?
I've tried a really old Acer keyboard (PS/2) and got the exact same results. My (new-ish) Cherry Linux Keybaord is USB, but plugging it into the PS/2 socket (with an adapter) makes no difference. I seriously doubt it's actually the keyboard itself that's the problem. As I mentioned, if I switch out of KDE to a text terminal and log in there... the CLI works fine... which is how I manage to roll back the kernel to the previous version (stock kernel from the SUSE 10.1 DVD). At CLI, I have no problems with the new kernel and any keyboard (PS/2 or USB).
How old is the Bios?
Brand new.... this is a new AMD X2 in a new ASRock motherboard.... I have the latest BIOS that is available for my motherboard. Checked that :-)
In the past, I've had problems with usb performance when acpi was not invoked, which is why I asked if the kb was usb.
USB works perfect as far as I can tell. All other USB devices (including mouse) work fine. C.