I also have the same problem of sporadically inactive shortkeys. My shortkeys are activated without prefix or suffix requirements, and I use Win2K with version 3.5c ME.
I will run into issues where no shortkeys will function (often for several minutes) and then suddenly start working again. No combination of opening/saving macros, restoring keybd hooks manually, etc. seems to do any good. This will happen in Wordpad, PowerTerm, other applications. (And yes, I did check the ME icon in the tray for the running man to confirm no macro is already running and blocking the shortkey activation.)