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A Palm convert huh? Well I'm glad you decided to switch.
I don't use the block recognizer, so I can't say I've had this issue. I haven't read about it on this site either.
To determine if it's a conflict, you could do a full backup, then a hard reset. Before restoring anything, try it out and see what happens. If it works then, chances are it's a program conflict.
If it's still a problem, I guess you'll have to live with it while learning to use Letter Recognizer. I find it much more intuitive than Graffiti anyways.
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