I would try plugging an external keyboard or mouse in to see if that works.
If it does, either the keyboard/mouse (2 in 1 on laptops) drivers are invalid in which case you can go to http://support.acer.com and download the keyboard/mouse drivers and/or utility.
Otherwise, most likely the keyboard/mouse hardware is the porblem.
In which case either the cable connecting it to the rest of the laptop is loose or more likely the entire keyboard/mouse device is fried.
I suggest contacting the manufacturer (Acer) and if your laptop is still under warranty get them to replace it; if not buy it.
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Replace the inside of the keyboard with a new piece. One of the major problems with Acer keyboards is that the plastic pieces holding the keys in place become loose or broken. You can find a cheap keyboard from Papatek.com or an electronics store. Simply take apart the new keyboard, pull the keys off your keyboard, lay the plastic piece on top and replace your keys. http://www.papatek.com/Acer-Keyboard/
was there any liquid damage? just to check the intregrity of the hardware i would maybe boot off of a linux distro just to check and see if it works that way. ubuntu is free and if you can choose to "try linux without installing" option just to verify. this will let you know if it is a hardware or software problem.
This may be a battery power monitor issue. Try disabling the "Mircosoft ACPI- Compliant Control Method Battery" device. This is located in Control Panel-->System-->Hardware Tab-->Device Manager-->Batteries. Had similar problem with 2 Acer Aspire series laptops (diff models). 2 and 3 year old. Original batteries (both still hold charges for 1.5 hrs of normal usage). Running WinXP, one with SP2 and other had SP3. Both came in the last month with slow jerky TPAD function and nearly non responsive keyboard access. Checked the usual; virus, spyware, hijacking, driver conflict etc. Cloned drive and factory installed..still same problem with kb & mouse. However an external USB keyboard and mouse functioned normally (no lag). Noticed with Battery removed kb & mouse was normal. Finally found disabling ACPI control battery device resolved this issue while allowing laptop to run on either battery or AC.
try to repair os installation it might be happening due to some driver conflicts . in safe mode only basic drivers like keyboard mouse etc will work other device drivers have no role in safe mode try it
Try re installing both, while in safe mode go to my computer, right click>properties>hardware tab>device manager and go down the list to keyboard,click '+' and right click on keyboard and select uninstall.
Re start laptop and see if it works ok.
Do the same for the mouse, but look for the line mouse and other pointing devices and uninstal and restart.
try also updating the drivers.
I'm not familiar with Windows Vista, but maybe it's a problem with some driver. Try to boot up in safe mode and see if you get a response from the keyboard and mouse. If you do then it might be a driver issue.
Sorry I can't give you the exact solution. But I hope it helps in solving this problem.