That sounds like your USB bus might be having problems.

I agree, that is what it looks like. The physical USB bus seems to be fine as the keyboard works in the grub editor. This appears to be a USB bus software issue.

Have you tried the keyboard in every USB port on your system?

I just tried a wired USB keyboard in several ports. No joy. I have also tried my wireless USB keyboard in several ports. No joy.

Am I the only one experiencing this ? If this is a global problem a lot of people are going to be affected !