Ok, I finally managed to solve it myself.
I already had network boot disabled in my BIOS.
When my computer booted, a message "Boot from Network Now..." appeared. At this point I pressed the F12 key which initiates boot from Network.
Immediately I was taken to the GRUB screen since network boot failed (obviously since it was disabled).
Now, my keyboard worked.
I was also able to boot from my DVD drive and the USB drives after this.
Not sure how the problem appeared but it was very annoying and I am glad it is resolved now.