Don't understand the bug/problem. It is working fine for me. Kind of liked the demo also.
Well, for me, whenever I have gravity set to "Up" (pressing the NumPad 8 key), I cannot move left or right with the arrow keys, but when gravity is set to "Down", "Left" or "Right", the arrow keys move the character left and right along the wall that gravity deems to be the floor, as it should do.
Can you confirm that you can move left and right when Charlie Brown is upside down, and walking on the ceiling?