SOLUTION: It seems that the most recent update changed my preferences to remove the setting that record enabled a midi track on selection. In turn this disabled midi input. Now corrected and all ok.
I am running C6 (version 6.0.5) 64 bit on Windows 7. My keyboard is a Yamaha KX49. Prior to installing the latest update, I simply plugged my Keyboard into PC USB port, started C6, loaded a VSTi and could play. But now something seems to have gone awry. The keyboard is listed under all midi inputs and the keyboard transport controls are being read by cubase. However, the keys on the keyboard (and contollers- mod wheel etc) are not triggering the VST instruments. I have tested the keyboard with a standalone version of Halion 4 - and all works fine. But open Halion 4 in C6 - and there is no response.
Also, using the standard QWERTY keyboard functionality fails to trigger the VSTi. So, it seems as if all inputs are failing to register.
I suspect that I may have missed something really obvious. Any suggestions/advice would be most appreciated.