I had the same issue with my KVM that uses PS/2 Mice and keyboards. I had to replace it with USB. Seems like ESX/ESXi hosts only use USB input devices. They're cheap so I didn't bother trouble-shooting it much.
Yes, I'd like to confirm the same happens with ESXi 4.1 Update 1 as well. The PS2 keyboard stops working when the installation screen comes up.
The only workaround I have at this time is to use a USB keyboard. :smileygrin: It can be plugged in straight away without rebooting the ESXi installer.
Cheers...
This fix worked for me...
When you boot your ESXi 4.1 and see blue screen fast press TAB to edit boot options
then edit with "acpi=off" it should look like this;
mboot.c32 vmkboot.gz acpi=off --- vmkernel.gz --- sys.vgz --- cim.vgz --- ienviron.vgz --- install.vgz