You may have switched on caret browsing.

• http://kb.mozillazine.org/accessibility.browsewithcaret

You can toggle caret browsing off/on by pressing F7 (Mac: fn + F7).

• Tools > Options > Advanced > General > Accessibility: [ ] "Always use the cursor keys to navigate within pages"

Note that this is an accessibility feature of Firefox.

• http://kb.mozillazine.org/Scrolling_with_arrow_keys_no_longer_works
• http://kb.mozillazine.org/Accessibility_features_of_Firefox

If the above does not help,

Start Firefox in Safe Mode {web Link} by holding down the <Shift>
(Mac Options) key, and then starting Firefox. Is the problem still there?

Unchecking the "Always use the cursor keys to navigate within pages" worked perfectly! You guys rock, thanks so much for the info and suggestions!

Note for future reference: the above is the only way that resolved the blinking cursor problem. Safe mode did not fix it- no offense FredMcD! Just wanted to let you all know :)

Thanks a bunch! I truly appreciate your help.

You're welcome.

You can disable the F7 shortcut key by setting accessibility.browsewithcaret_shortcut.enabled to falase on the about:config page.