Okay, I made some changes to the program and uploaded a new .deb (now version 1.0.2) which you can get from the post above.

Changes to the program:

1. D-pad center button now toggles between horizontal and vertical entry.
2. The two "check" buttons now pop up a message window since the status bar doesn't seem to work.
3. Program now checks for presence of xkbd and launches it with a layout I designed for xword on the N800.

The xkbd feature is nice for my N800 since it takes up the vertical space on the left (where the launcher icons are) much like the DosBox xkbd layout. I added a few special buttons (which you can see in the screen capture below) so you don't need to press any buttons on the d-pad if you don't want to.

NOTE: If you do NOT want xkbd to launch at startup, edit the file "/usr/share/applications/hildon/xword.desktop" and change the "Exec=..." line by removing the trailing ".sh" so it looks like this:
Here's the screen capture and an explanation of the special xkbd buttons at the bottom of the layout.