The host is a Dell 1545 laptop - so no external keyboard. This is a new machine, 2 weeks in service. I have another VM on this machine that functions just fine. I imported it from another Dell laptop. It has not exhibited this problem. The current guest was a clean install of XP, then installed Service Pack 3. I don't know if this is important - I run several XP VM's, none have SP3 installed. I use them as CAD/CAM workstations.
Another observation - when the keyboard is not working, I can minimize the VM then restore, and the keyboard is back.