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The arrow keys still allow me to change my character's direction. In fact, I think I'm still walking around in the background, because the screen flashed again after hitting the arrow keys a bit. I suspect I'm now in two combats at once. :)
Yep, definitely two combats at once. I defeat the other enemy and now I have the combat HUD permanently overlayed on my screen, even though I'm now back wandering around on the overworld map, trying to get back to town.
I still don't have a fix for the movement bug, but I've made changes to the battle starting code which should prevent this from happening.
Thanks for the report