There a .capx, you can see the issue, i disabled Key Downs group, so everything is fine, then you need to enable this group, you can see mouse cursor over the sprites aren't working, also every keys don't work except key number 4 works due to being last list on the event sheet.
Is that bug or is design?
http://dl.dropbox.com/u/76227787/KeyDown%2BCursorBug.capx
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Oops!
Actually isn't a bug, because there "Else" special conditions are stopping to Keydown, i removed all Else conditions and it works!
I'm sorry, it's my mistake.
I really think it was a problem with all your "else" events in this project .... each overide previous work done !
Oups you have found before me sorry ! ... not so easy to work with instances sometimes ;-p