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f33e652
(Get the code!)
I had the same problem with the Final Stable release of Ubuntu 7.10, using TightVNC Server. WSJ's trick noted above of typing US (displayed as mb) in the Configuration Editor > desktop > gnome > peripherals > keyboard > kbd Layout key worked great, but this seems more like a bandage than a real fix. I upgraded from 7.04 to 7.10, and did not have the problem until after the upgrade.