Comment 3 for bug 256571

I also had a similar problem. After booting up the daily-live, the USA keyboard layout was chosen, and just as you described no arrow keys worked.

They started working after I dug through the Keyboard settings and set the keyboard model to something similar to what I have (in my case a Dell PC-101)

I think it's reasonable to expect a working layout to be chosen by default since people aren't likely going to go through the "type this key, now type this key" wizard unless they have to.