I had a similar strange problem with AltGr while having the following entries in .inputrc :
set meta-flag On set convert-meta Off set output-meta On I entered those to be ableto have danish national characters displayed correctly in bash. The effect was that using xterm in a local xserver would not give me AltGr characters - it worked allthough in xdmcp session - why I have no idea.... The "fix" has been to comment out the meta-flag statement : #set meta-flag On set convert-meta Off set output-meta On Hereafter the xterm works as expected.... Med venlig hilsen / Regards Franz Wolfhagen