You may try the following (you may have been through some already) and see whether it helps, 4) or 5) may be most likely:
1) Close down Illy and open again;
2) Restart the computer;
3) Close down Illy and press Ctrl+Alt+Shift/Cmd+Option+Shift during startup (irreversible);
4) Move the folder with Illy closed (reversible);
5) Look through and try out the relevant among the Other options (especially the usual suspects in Item 7);
Even more seriously, you may:
6) Uninstall, run the Cleaner Tool and reinstall.
When typing, between words you want space, creating that with space-bar.
(when typing phrases)
When touching space-bar between words, texttool stops and arrow-tool gets selected.
So can not type normally.
Does this make my problem more clear?
Restarting computer and/or Illustrator does not help.
Trying the Ctrl+Alt+shift opstion when restarting now.
Thank you in advance!