Ok, I thought maybe the new patch would have sorted this problem, but it hasnt.
I have tried to change the resolution of monitor. Also as Im running dual monitor, I tried to disable one and use the other and vice versa.
I have also tried changing my video driver to see if this helps, but again nothing.
Im running a nvdia GTS250 graphics card.
Im desperate to get into making maps but just for this one reason, I cant use it!
Please, any help or suggestions?
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Just for future reference, I found a work around.
Once you have entered the text into your label, use the tab key to select the 'hidden' ok button. Then press enter. Job done!