Specifically, the following warnings often appear
Secure Input is Enabled
Secure Input is enabled which means the
system thinks you
currently in a
password field and will not allow
applications to monitor the keyboard.
This will stop typed string triggers from
working, as well as stop Keyboard
Maestro from sensing your keystrokes
while setting hot keys.
You will need to find the offending
application (probably loginwindow) and
This symptom does not go away even after closing all other applications I am using.
Restarting the PC cures the problem, but it happens so often that it would be nice if it could be handled without having to restart the PC.
This page on the Wiki explains the problem, and the links to the Forum thread and Smile's page about it should help you track down the software that's causing it.
There's no easy cure-all -- I'm afraid you'll have to hunt this one down yourself.
@Nige_S covered it.
Basically, this is the system thinking you are in a password field. Keyboard Maestro is simply reporting the state, since it has consequences on what can be done (specifically Keyboard Maestro cannot sense any keystrokes, so Typed String triggers wont work, Modifiers and Key conditions wont work, Typing will not fully work, etc).
You have to find whatever software is telling the system to go in to Secure Input Mode and resolve it.