@mmcp42: Thanks!
@Zigmund: After re-testing I found one major problem was simply that the way I had written it, it took a second per debugging blink. So if you press button 9, it spends 9 seconds blinking LED 13. So therefore if you quickly press that button again nothing happens.
Try taking out the slow blinking code, and replacing with serial debugging (of course, you need to do a Serial.begin in setup), like this:
void acknowledgeKeypress(byte key)
{
Serial.print ("Got key: ");
Serial.println ((char) key);
}