I used to use the targus IR keyboard with my x5 which was great because there was a little mouse that also worked on screen. I would imagine tha IR would need to be on as you said for it to work (that;s how it worked on tmy targus one), I did a google to try to help you and apparently others have had your issue with that keyboard as well, no matter what version of wm they were using. Maybe someone else will have some ideas.
so i bought an IR-503 keyboard... - Axim Users Dot Com
IR keyboard drivers... need help
not sure if you googled it or searched this site, but a lot of stuff came up, with probably a lot being junk results though.
Good luck.