Turned off T9, switched to "ABC", ans I am using the hardware keyboard. The same problem persists. The black line still appears at the bottom of the screen, when I type something it appears both at the "correct" location plus on the bottom black line. If I make the mistake of using the keyboard arrows - crash boom bang. A lot of words appear near my cursor. And the funny part is that I always have to read my SMS before sending it: this magnificent auto completion method somehow finds a way of adding unwanted words somewhere in the message body. It is *very* annoying.
I don't always use English when I type a message, and, horror: sometimes I even don't use punctuation, because I'm in a hurry.
Windows Phone 7
Total Storage: 3.49 GB
Micro SD: 4 GB, Kingston, SD Class 4
OS version: 7.0.7004.0
Firmware revision: 2250.09.07401.605
Radio software: 5.51.09.29_184.108.40.206U
Radio hardware: A.102.0.D4
Bootloader version: 0.96.2250.0
Chip SOC version: 220.127.116.11