Running Ubuntu 8.04 and scim (http://www.scim-im.org/) (version 1.4.7 plus libraries and gnome bindings), I am not getting any input events at all from the Keyboard, although Keyboard.create() works. Uninstalling scim solves the issue. Problem occurs with lwjgl 2.0 beta as well as with 1.1.4.
Have you tried to use scim alongside other apps that access the keyboard directly, like some SDL game?
I tried that with Doom 3 Linux and with a version Tux Racer (I think both of these use SDL for input), both could access keyboard without problems alongside scim.