"After installing the Windows security update released on October 14, 2025 (KB5066835), USB devices, such as keyboards and mice, do not function in the Windows Recovery Environment (WinRE). This issue prevents navigation of any of the recovery options within WinRE. Note that the USB keyboard and mouse continue to work normally within the Windows operating system."
https://www.msn.com/en-us/news/technology/windows-11-s-october-update-breaks-keyboard-and-mice-microsoft-warns/ar-AA1OPqhT
If you have already installed KB5066835, it's best to avoid recovery mode for the time being. If you have not yet installed the update, you can wait until Microsoft has released the patch.
Fix now available:
https://www.neowin.net/news/microsoft-outs-kb5070773-emergency-windows-11-update-to-fix-unusable-usb-keyboard-mouse-bug/
https://support.microsoft.com/en-us/topic/october-20-2025-kb5070773-os-builds-26200-6901-and-26100-6901-out-of-band-0f533ed7-949a-4b89-8d0f-6ee751adfcd4