We use SGD to provide access to few applications. After installing Leopard I could focus and click with a mouse but all keyboard input was ignored for SGD applications.

Searching online I found some indications that X11 in Leopard has some application interaction issues. The solution presented in a number of different forums for various applications was to downgrade to Tigers X11.app. I tried methods from a couple of posts and didn't have success. Instead I mixed and matched the steps from a couple of suggestions and found a solution that worked for me.

I have not tried to recover from this change, You can PROBABLY re-install X from the leopard DVD.

When this is complete you will probably have two X icons in the Dock when X11.app is running.

The steps can be summarized as:

1. Download X11 Update 2006 1.1.3: "http://www.apple.com/support/downloads/x11update2006113.html"
2. Destroy your current X11 installation
3. Install X11 update 2006
4. Change the path to your window manager in xinitrc
5. reboot

wget 'http://wsidecar.apple.com/cgi-bin/nph-reg3rdpty2.pl/product=12045&cat=60&platform=osx&method=sa/X11Update2006.dmg'
open X11Update2006.dmg
sudo launchctl unload -w /System/Library/LaunchAgents/org.x.X11.plist
sudo rm -R /usr/X11R6
sudo ditto -Vx --noqtn /Volumes/X11\ Update\ 2006/X11Update2006.pkg/Contents/Archive.pax.gz /
sudo perl -i -p -e 's:exec quartz-wm:exec /usr/X11R6/bin/quartz-wm:g'

The instructions I found online indicate that a log out/log in should do it. I found that it didn't seem to start working until after I rebooted.
<reboot>