Really silly problem here.
In Visual Studio 2010, the text cursor has changed from the blinking line, to a blinking grey box around the characters. When I type over
Visual Studio : Right Bottom : Look for OVR label. Double Click on it.
Bingo...
Ran into this issue with Parallels and VS 2013. Command + Insert also fixed it in my setup, in addition to the accepted answer. On my Windows USB keyboard Command == WindowsKey.
None of the solutions above were working for me. My workaround was to open the on-screen keyboard using the system settings (press Windows key and search for "keyboard" to find them). Once that's open you can click the Insert key on it.