I am using yahoo messenger on an Verizon 8830.

I am in the middle of a conversation and at some point nothing appears when I am typing in the box and when I click send it submits the text all caps and backworks

for example if I type "hello" nothing appears while I typing and if I click send

OLLEH appears and sends on the IM.

Any idea what might be causing this?

That's odd. I've never experienced this...
Have you tried reinstalling Yahoo?