Patrick, Yes, I've restarted the VM and made sure everything was patched and up to date. The problem is very predictable.
I thought the same thing you did about a keyboard conflict but it doesn't seem to make much difference what I change in QS or in VMWare. Normal keystokes as well as control keys (e.g. CTRL-ALT-DEL) don't get passed to the VM. Turn off QS and everything works great again. If you have any other ideas.. sure would appreciate them. Shawn