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bbfa235
(Get the code!)
Adding more info:
The problem is that what's visible as the root window isn't really the root window. It has some X client running on top of it, so it gets the focus as the mouse enters it. I verified this by running xkill and clicking the root window. It actually killed something, which wouldn't have happened with a normal root window:
xkill: killing creator of resource 0x280000a
After killing that invisible layer, "sloppy" starts working as it should.
So the problem is an incompatibility between "sloppy mode" and whatever app runs on top of the root window and presents a text field at the bottom right when typing in the root window. I don't know what this app is, but it has to be disabled in sloppy mode.