I've sort of worked it out a bit more.
It starts out with the default keyboard shortcuts all working normally, Cmd B for brush and Cmd P for pen, etc.
Then when you press the Tab key to hide the palettes, instead of hiding the little icons around the document window, cycle. As you keep pressing Tab, so it goes to Tracing Paper, Grid, Colour Management, Impasto, and so on. When it stops then the Space Bar turns into a toggle stwich that controls whatever the previous step was on. At this point the Keyboard shortcuts don't work.
Curiously, if you open a new document everything works until you press the Tab Key, if you open a new document before pressing Tab then the keys will work on that document BUT if you have another document open where the Tab was hit then it won't work but the new document will.
Its as if the Tab Key bug is not just to do with the program and the tab key but it also remembers which document was in use whenever a tab key is pressed. Weird.