I run a KVM, and I can't see how it could be the cause of your issues, unless a defective one could be seriously messing up the keyboard or mouse inputs. But I still don't see what kind of KB or mouse input would explain that behavior.
Did you receive a driver disk with it? I wonder if you got a counterfeit one with malware. Mine uses no driver. Just hook up and it works.
What happens if you remove the KVM and just switch your mouse, keyboard, and monitor manually between them? Do both computers work okay without the KVM?
Just for fun, try to right click on one of the .exe's for the Properties box. Does it show Notepad as the default application to open it?