"Let me answer my own question, since this was really odd, but had a happy ending:
I noticed that when I would type the word ""another"", the cursor would ""come alive"", erase the word, and retype it as another word, e.g. somethings ""anotherr"" and sometimes ""anrother"". This was so odd that at first I just sat back in disbelief, then called my wife into the room so that she could confirm that, indeed, it was happening.
The problem turned out to be that I had installed the latest version of Texter, a program that enables you to define windows-wide macros so that when you type e.g. ""sigg"" and press the space bar, it will erase the word ""sigg"" and type out a signature for letters. Apparently this program has a problem with Windows 7 or a problem in general that was just causing it to freak out in subtle ways.
In any case, as soon as I uninstalled Texter, no more numeric pad arrow problems."