Hmmm, the console window often shows a lot of errors, but few of them are actually worrisome. When it says "Cannot read key.dat", I think it means that you have an invalid one, which means that you should delete the one you have, re-enter your key, and it will generate a new one. I don't understand the keyboard movement problem though.
On a somewhat related note: You cannot run Blockland from a flash-drive or a CD/DVD properly. As it needs to be able to access and overwrite data in the Blockland folder as it is being run.