I just tested it, and there isn't actually a 'problem' on Xbox, but you have to be EXTREMELY fast for it to work. It goes like this:
• Click the mouse on the _ _ _ _ _ field.
• The 'KYBD' acronym appears.
• From that moment on, you have only a few seconds to type.
I also noticed that as long as the 'KYBD' message (which I assume stands for Keyboard) is visible, no mouse clicks on the _ _ _ _ _ field are accepted.
To make it ideal, would it be possible to extend the duration of this keyboard function? For instance, if I have to type a custom waypoint (which is usually long), I have to type very fast. If you pause halfway through, it disables the function.
In short: I think that when clicking to enable the keyboard function, it should stay active for longer, and it could be disabled at any time just by clicking with the mouse again.
It sounds a bit confusing, but tomorrow I'll try to record a video so you can better understand what I mean.