9/1/2009 Update: The problem turned out to be related to the wireless USB hub for Logitech’s MX Revolution (and others?) mouse. If you unplug it before you change the Modifier Keys the changes do take effect. You can then plug the Logitech USB dongle back in and everything works fine. I tried every combination of plugging my keyboard into my computer but the Logitech dongle was plugged into the back of my display so I didn’t think to try it. Michael Richardson figured it out.
I installed Snow Leopard this morning and discovered that they broke the most important feature of any OS: swapping Caps Lock and Control. The Control key isn’t used much by most users, but developers use it all the time. In fact, it’s safe to say that no developer worth his/her salt doesn’t swap their Control and Caps Lock keys and I haven’t had an OS in decades that didn’t do this… until now. Actually, Mac OS X didn’t do this officially until 10.4, but you could edit a .plist file to swap the keys, which was good enough. In 10.4 they conveniently put the feature in System Preferences and officially supported it. Until Snow Leopard broke it. Not even the manual way to change it works anymore.
To be clear, this setting in the System Preferences Keyboard pane has no effect whatsoever, not just for Caps Lock but for any of the keys:
It’s bad that the retarded [Update after finding out the true cause of the problem: My apologies to the Apple developer for calling them “retarded”, I should be calling the Logitech developer “retarded” because they obviously did something non-standard with their driver for the USB dongle] developer that broke this didn’t even bother to test their change themselves. It’s inexcusable that the entire time this was broken during the development of Snow Leopard (12 months?) nobody at Apple noticed it, not even their developers.
This is like an auto mechanic never noticing that his wrench is broken. Or a bartender never noticing that his corkscrew doesn’t work.