I am also seeing this behaviour, using Ubuntu 9.04 (jaunty) amd64.
My keyboard is a Logitech G15, and is configured as so under Keyboard
Preferences -> Layouts.
Disabling autorepeat in System->Preferences->Keyboard _does_ work, however.
Running a script with "xset r off" or "xset -r" also produces the bug (endless
stream of the enter key).
** Changed in: xserver-xorg-input-evdev (Ubuntu)
Status: New => Confirmed
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xset -r causes loss of control of keyboard
https://bugs.launchpad.net/bugs/367136
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