Attachments are disabled, so please provide the files from another hoster like flickr, imageshack or your own web site. regardless of this, I would check the text formatting and the appearance panel. Might well be that you have set some odd manuall tracking/ leading or applied an effect/ secondary appearance that interferes. Either it's these extra attributes that make things go wrong or the otehr way around, AI not carrying them across correctly.
I don't have a website and don't use any of the others you suggested.
I will try to simulate the screen shot by reproducing it in text
below. In the words you see, the letters in red and in all capital
letters (EST) were the ones selected with the type tool. The letters
you see in blue caps (ED) were the ones on the clipboard that were
supposed to be pasted where the red letters to the left were selected.
As you can see, the pasted letters were not pasted where the text
selection was; rather they were pasted randomly several words down:
"The people were humblEST in the days that followed andED all was
Your "solution" is not a solution. I have tried removing all manual
text adjustments such as leading, tracking, and optical kerning and
setting all the text to default settings before working on the file in
CS4, but it still doesn't solve this problem. Eventually the I-Beam
just will not insert where you click with the type tool or double-
click with the selection tool. There are no appearance features
My point is that CS4 apparently does not support text files from CS3,
or any other CS version for that matter. I didn't have this problem
with CS versions 2-3 after the big CS jump to Open Type (which was
worth the sacrifice because of the huge improvements to text features;
plus, with the first CS version, you could still edit, insert, and
reformat the text from legacy files even if you lost some manual
adjustments). I see absolutely no improvements to text features in
CS4, and there is no reason a CS3 Illustrator file should not be able
to be updated and fully editable in CS4. None of your literature
advertising your upgrade to CS4 mentioned that we wouldn't be able to
work with text from our CS3 files in the upgrade, either. I consider
this a bug in the software that should be repaired.
Can you please report the problem, and will Adobe fix it? This renders
all my previous Illustrator files pretty useless, and Adobe should fix
it. Why would I ever want to upgrade again if you do not support
previous Illustrator files, nor do you warn us that if we upgrade this
will be a limitation?
Please reply to me and send this to the Adobe research and tech teams.
Can you give us some information on which operating system you are using? The problem you report is not something I have had a problem with in any of my files from as far back as AI7 which I can open and edit in AICS4 with no troubles. Please also note that this is a user-to-user forum. No one from Adobe officially monitors this forum. All help given here is voluntary by people who like to help others.