Yep. What I ended up doing was clearing the capacitors as described in Logitech's Support:
"I can't get my cordless keyboard or mouse to work. Why not?"
I have a "Cordless Mouseman Optical" and "Logitech Cordless Keyboard".
Both work fine under Linux (and indeed in GRUB/DOS/BIOS) - I'm posting this from Ubuntu.
But under WinXP, the keyboard no longer works - tried removing drivers, reinslling CD, downloading new drivers, leaving bateries out, connect button many times, but as soon as I press a key on the keyboard, even the mouse freezes up. The computer is still fine - if I plug in my handheld, windows connects to it etc.
Anyone seen this before?