Arrow Keys print characters in Insert mode

[wady101]

Like the title suggests, when in Insert mode of the VimIDE, characters are printed on the line above. So for example, if we take a few lines of code from vimrc

"==========================================================================
" Make vim incompatbile to vi.
set nocompatible
set modelines=0

So if my cursor is on set nocompatible and I am in Insert mode, I press the up arrow key and this happens:

"==========================================================================
" Make vim incompatbile to vi.
A
set nocompatible
set modelines=0

From what I read from the net, it happens in vi. But the lines to make it incompatible with vi have already been added to the config file.
I loved the IDE, but please someone help! It sucks to switch to Normal mode to move the cursor around (or using the mouse :( )

[wady101]

Forgot to mention : The delete key is also capitalizing the character I want to delete in insert mode.
Here is what I tried to fix this problem in a .exrc file (Though didn't work :P)

set nocompatible

map! ^[OA ^[ka
map! ^[OB ^[ja
map! ^[OC ^[la
map! ^[OD ^[ha