I had the same issue after the latest round of updates. After restarting in safe mode to have win7 uninstall the updates, I am only able to register a keystroke or two to enter my password before the physical keyboard stops responding. I can login under the guest account without a password and then switch users (not logging off the guest), and I am then able to type the password just fine. However, the computer locks up if I try to shut down or the screen goes black if I try to log back in to the guest account. If I revert to the pre-update configuration, the keyboard issue still persists and I have to do a complete recovery for the problem to go away.