I have just downloaded Hotkeys 1.4 and installed it on my Win98 machine (w/IE 5.0). I have experienced the same problem: the program installs fine, and accepts key combinations that appear at first to work. However, upon repetition, only the built-in shortcuts continue to work (e.g., Win+x type shortcuts).
I hope that this will be resolved in the future, as the program looks like it could be very useful. But, I can't use it as it currently is.