I can't find the original message..
but I recall a keyboard not working console problem.
Try pressing the menu key near the F4 key and having a look around at the keyboard related settings.
You might want to power off the terminal, power on while pressing D (yuo should hear a beep) release D, then try again..
Other than that if you can telnet to the server, you should have a look at the console definition in the /etc/inittab and ensure it looks ok:
Bill
It works for me (tm)