Having trouble typing in my password login

I have a Dell Inspiron 1545 laptop with Windows 7 Home Premium 64 bit installed which worked fine up to a few days ago.
It started prompting for the BIOS password to log on wish I had to get from Dell.
When I get to the Windows 7 screen and try to enter the password,I can't type anything in the box and it will not allow me to type at all.
I've tried using an external (usb) keyboard and get the same results-It won't allow me to type.
I have slso tried to go to " Advanced Startup Options "(holding the f8 key down while starting) and it would not boot into the " Advanced Startup Options ' screen.
Finally after several tries, I got it to go to the " Advanced Startup Options ' screen but I cannot get it to arrow down to the " Last Known Good Configuration " option.
The screen is frozen. I have rebooted several times with the same result. I figured if I did this it would restore the system to a point where the keyboard worked.
Is this a system issue,a driver issue or is the keyboard bad?
As I mentioned earlier, the usb keyboard when plugged in also did not type.
Thanks

I purchased the laptop about 18 months ago.

The machine came with Windows 7 intalled on it. Yes I did do a BIOS update as recommended from the Dell website.

I did the BIOS update after this problem came up.

Do you have any PS2 ports on the machine that you can use to try different keyboards? The USB ports might be locked up due to the Bios update, thus preventing the use of a USB keyboard.

Was this machine purchased from a person or a store?