Caps Lock not working on 10.6.7 my caps lock key doesn't work. I changed the keyboard and it also doesn't work with the new one. Now, every other key works fine, and if I go to pref pane> keyboard and replace caps lock with say option key, then it lights it up, so I know that's not broken.

This is an old macbook pro, 15 inch, 2ghz, but with Leopard worked fine and now it doesn't. 

Has anyone come across something similar?
Have you checked to make sure that your CAPS LOCK key is turned on in your Keyboard Preferences?

Go to System Preferences -> Keyboard -> Modifier Keys. Make sure next to Caps Lock, it says Caps Lock and not "No Action".

Also, do you have any 3rd party Keyboard Modification Preference Panes installed, like KeyRemap4MacBook or PCKeyboard Hack? Those can be used in various ways to disable or otherwise alter the CAPS LOCK behavior.