Hey Bob. I'm going to do a copy & paste from a previous post that I made about this. I've had a similar problem. (If some of the wording doesn't apply to you, sorry. Like I said, I just grabbed it from a previous post I made & someone mentioned that they were told to do a factory reset. 
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I used to have the same problem. Here's the fix. When that happens you need to do a few things. No factory reset is ever required either. I never had to do one.
- Press the Menu key and then Manage apps. Under the "All" tab scroll down to the "Multi-touch keyboard." Clear data. Clear cache. (Anything that can be cleared. Haha!) Force stop it. All that jazz. Go "back to home."
- Next. Press the Menu key again and this time choose Settings. Scroll down to Language & Keyboard. Select Multi-touch keyboard. (Underneath it should read "Multi-touch keyboard settings") The following are what I have MY personal settings to as I've found that these are what caused my keyboard to "unfreeze." Or I should say, when I "unchecked" a few things, my keyboard no longer froze.
On-screen keyboard:
- Show suggestions - Checked
- Auto-correct errors - NOT checked
- Auto-punctuate - Checked
- Vibrate on keypress - NOT checked (Note: This had nothing to do with my keyboard freezing. It just annoyed the snot out of me when it vibrated every time I used it!
) - Sound on keypress - NOT checked (Note: Same annoyance factor as vibrate on keypress thing. Has no effect on freezing.)
- Auto-capitalization - Checked
Device keyboard:
- Show suggestions - Checked
- Auto-Correct errors - NOT checked
General Settings:
- Highlight words - Checked
- Next word prediction - NOT checked (THIS one is IMPORTANT. DO NOT have this one checked. BIG factor on freezing issue.)
I hope this helps!
