Okay, upon testing further this appears to be caused by whether or not Numlock is toggled.
Specifically, if numlock is on, movement and 'w'alking works the same, you can use numbers on the keypad to select various selection menus (like skills), but 'l'ooking skips over dungeon features. If numlock is off, movement is fine as is 'l'ook, but you can no longer use the numbers to select things.