This is a bug in OS2008. It has been around since the beginning of OS2008 and has never been fixed even after almost one year. DTMF worked fine in OS2007.

It was initially reported as bug number 2756 in the Maemo bugzilla. Unfortunately the person reporting the problem reported it as having to do with Google GrandCentral service, which it has absolutely nothing to do with the problem. So the problem was never investigated. I reopened a new bug as bugzilla number 3652, but the Nokia employees responsible closed the issue without resolving it.

Since usage with SIP was the original reason I purchased my tablet, and I badly need DTMF, Nokia's response to this is very frustrating. I either have to use and pay for Skype, or use OS2007 and forgo my bluetooth keyboard. Neither alternative is reasonable since Maemo DTMF should work properly or be fixed. There is no excuse.

I suppose I will have to try and install Twinkle or something in Debian since Nokia refuses to address the issue in Maemo. If anyone knows of an alternative VoIP app which works in OS2008 or in Debian I would be very interested.