If you click on Edit, what do you see in the "Undo" description?
Any chance that you have a macro assigned to ctrl-Z?
Start excel is safe mode and test her out.
Close excel
Windows start button|Run
excel /safe
(this keeps excel from running macros and even from loading customized
toolbars.)
File|open your workbook and see what happens.
If that works, then you'll have to find the culprit. My bet is that it's an
addin (tools|addins) or a workbook/addin located in your XLStart folder.
Chip Pearson has some instructions for finding problems at:
http://www.cpearson.com/excel/StartupErrors.htm
Essentially, you're going to move stuff out of your XLStart folder and uncheck
everything under Tools|Addins. (But keep track!)
Then one by one, you'll add one back and restart excel to see if that caused the
problem.