It appears that Hamachi (VPN client) was the cause of the problem:
Hopefully, a solution will be forthcoming over at the Hamachi forums:
So, I like to type addresses in the address bar of Windows Explorer.
About a month or so ago, something changed that made that very difficult to do: about every 10 seconds, the path text resets to whatever the current folder is.
As an offshoot, if you happen to start typing into the address bar towards the end of that 10-second rotation, your text gets reset to the current folder. The current folder text is highlighted, and the cursor is at the end - it's the same result you see if you hit ESC while typing an address into the address bar.
This happens both at work (XP Pro in a domain) and at home (XP Pro in a workgroup).
I've done some searching in these forums and via Google, but haven't had any success finding a solution yet... if anyone has any ideas to help alleviate this problem, they'd be greatly appreciated.