Version:           4.1.4 (KDE 4.1.4) (using 4.1.4 (KDE 4.1.4), Kubuntu packages)
Compiler:          cc
OS:                Linux (i686) release 2.6.27-11-generic

This is an issue similar to 123277, yet yet it happens when using Konqueror as a file browser.

To reproduce:
1. Open a new Konqueror window. Open ~
2. Open a new tab. Open ~/.kde
3. Hit ctrl+, (or your shortcut for switching the tab to the left).
4. Using arrow keys does not move anything.

Additionally, you can select an icon with mouse while being in the first opened tab (after step 2). It does not change anything.

This problem also appears when the focus is inside a directory and you are navigating through files with arrow keys.
1. Catch the focus into file browsing so that you can navigate with arrow keys (i.e. with mouse).
2. Go up with alt+up.
3. The focus is lost.

The expected behaviour is to navigate up and switch tabs while still being able to navigate through icons with arrow keys.

It is an important issue, since it disallows you to navigate through directories with keyboard only -- you have to use mouse. In KDE 3.5 it was enough to open a new tab with local path and you could always navigate with arrow keys as well as alt+up for going up.
For me it was a reason to abandon KDE for Gnome (temporarily, I hope).