I had the problem today. Here are the details, with extra details in case it helps anyone.
The short version: something messed it up so that neither the current Swype nor uninstall/reinstall would work. Restoring a reboot from days ago fixed.
1. Everything has been fine for ages. Multiple reboots, nandroid backups, etc.
2. Did a nandroid backup. (quick reboot -> recovery -> advanced nandroid backup)
3. Reboot
4. Swype says load of EnglishUS failed. Swype works as a click-key keyboard and nothing else.
5. Reboot. NO joy. Same as #4.
6. Settings->Applications->Manage->
a. remove swype
b. remove swype installer
7. reboot
8. Install swype install. Open. Put in swype login credentials. Download swype.
9. Reboot to test if it works after a reboot
10. Swype says it is enabled with "limited functionality" since it's for another device.
It will not do word swypes.
11. Select input method android. then select swype. SWYPE NOW WORKS.
12. Nandroid, FORMAT DATA, CACHE, SYSTEM, Restore nandroid backup from 2 days ago. SWYPE WORKS
13. Reboot to see if it works after reboot. SWYPE WORKS
14. Reboot again. SWYPE WORKS
15. Nandroid backup. Reboot. SWYPE WORKS.
16. Maybe it was the format stuff... nandroid, format DATA, CACHE, SYSTEM, restore original backup. SWYPE can't load EnglishUS
17. nandroid, format D,C,S, redo step 12
18. Reboot again. SWYPE works.
