AC Game Edittor->Settings->Movement Method->PointAndClick (changed to Direct, and then back to PointAndClick ).
I just noticed when I changed a setting from "Point and Click" to "Keyboard control" (something like that), I could move the character around with WASD (sort of as expected, it didn't change direction but that's fine for now). However, when I changed it back to "Point and Click" it now seems to ignore the y axis altogether, and the character just moves on a straight vertical line.
[I should have saved everything in git so I could revert - but unfortunately I think I'll have to start over. Not a terrible loss - but I'm wondering if anyone else has seen this "bug" too. Not a big deal.]
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2D game - change was done not in play mode and the problem persists even after stopping and re-entering play mode.
I still have that project tucked away - but in order to make progress I started over, this time using a git repository (which is of course the moral of the story) so I can always revert if something strange happens.