Had this same issue running a qemu with kqemu:
# sudo qemu -hda /dev/sda -m 800
On the grub menu, I coudn't use arrow keys and got the same message. Off course, using a keyboard layout abnt2. After that I typed:
# setxkbmap -layout us -model us
and restarted qemu command. Worked fine!
I am running Intrepid: