I had a custom kernel for 1.3 but I thought that would be wiped out after changing to 2.ob3 and back to 1.3 (a few times)

That is correct. A software upgrade will wipe out any custom kernels. So if you did not install a custom kernel after installing the 1.03 upgrade, then it's stock 1.03 and there's no reason you should get that strange stuck-button-like behavior.

Did you get that behavior at home or in the car? If at home, was anything plugged into the serial port? If in the car, where is the serial port cable dangling behind your dash? What's the wiring like back there?