Only one application can open a given serial port at a time.

With local echo off and no wire shorting pins 2 & 3, you shouldn't see what you're typing (as is the default in both programs). Something is definitely odd. Maybe it's a short in the cable... if you unplug the cable from your PC does it still act the same? I suppose it could be a short on the mobo... I've never seen that happen before, but theory says its possible.

Do you have a COM2? Does it exhibit the same behavior?