1.7.4 - camera movement breaks on simple..

[ I just bought the PSK tonight ..and for the past 2 hours I thought I was crazy. ]

If I load the demo scene into the editor and then play the scene through the editor, everything is fine.
If I load the scene into the editor, select and then deselect the orange guy, then play the scene through the editor...the camera movement is broken.

I checked this several times. Why is something remedial making such breaks ?
What is going on there ? ..and why ?

// edited in:
#1. camera movement broken
#2. lives set at 00 (unlimited lives really, I kept dying to check it & I never stopped spawning)
#3. health doesn't work
..ok, everything that is the reason for this SDK is broken after I merely make a simple selection and then play the scene.