I have been able to reproduce a condition in which using the arrow eys in X causes extra keystrokesto be registered. Most notably 'r'. This condition exhibits itself in that once every 10 or so times the up or down arrow is pushed X behaves as if the letter 'r' had been pressed. Other keyboard- and mouse-related oddities of more obscure variety have also been observed. I have tested this with ati-drivers-3.14.1 and xorg-x11-6.7.0-r3 as well as with the built-in vesa driver witht he same X. The condition displays itself reproductively in vanilla-2.6.10-r1 but not in vanilla-2.6.4.
Can you please try development-sources-2.6.11_rc4 ? If the problem still exists there it would also be useful for you attach the dmesg output from both kernels. (preferably after a few extra keystrokes problems have occured on the newer kernel)
Please reopen when you test 2.6.11 and read comment #1
Due to the (understatement) slow releases of Parhelia drivers from Matrox I have not been able to test a new kernel. It seems that the problem has been fixed though. Everything works wery well now.