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Do you get an error message from ForkLift?
I'll try to reproduce the problem. Thanks for the detailed description!
As a workaround you could show the navigation wheel by tapping on the editor with two fingers and move the cursor one character to the right and then tap backspace/delete backward.
This shouldn't happen. Do you have any idea when exactly it behaves like that?

Currently, settings like this get lost when you copy or move a file. Maybe that's what happened to you?

Yes, I have already filed a bug with Apple. I don't know yet why this happens, but I'm actively investigating it. It only happens in the beta and it worked fine in iOS 3.2 and 4.

Thanks for your detailed report!

Hi Aaron,

the password is stored securely in the keychain. Unfortunately, the keychain values are not deleted when the app is deleted from the device. So in the current version of Textastic, there is no way to reset the password. Deleting and reinstalling the app won't work.

This really was an oversight on my part. So, to solve this problem, I plan to release an update for Textastic that detects when the app was started the first time after an uninstall and removes the password in that case. This doesn't make it less secure because all data like connection settings and files will be deleted when you delete the app so there is actually nothing to protect.

If you send me the device id of your iPad, I can provide you with a beta version of Textastic that does what I just described.

I'm really sorry for the inconvenience.
NSURLErrorDomain error -1001 is "kCFURLErrorTimedOut" - "The connection timed out."

So, the Dropbox server didn't respond in time. Maybe there is a problem at Dropbox at the moment?
A lot of the features you mentioned will be supported in Textastic 3.0.
You can enable the "Debug Log" setting in the FTP configuration screen. This will create a log file in the local "logs" directory in Textastic that you can view to see what's going on behind the scenes.