After disabling swype setting > word suggestion, i have no problem typing any words. Not sure why yours is different. What is your swype version?

Mine is 3.23.***** forgot the back. No idea why your's is acting the way it is.

Regarding phone hang, can be a number of reasons, could be caused by apps. Your using G or non-G, stock or custom rom?

Just monitor and see if it happens frequently or not.

I think Swype cannot be purchased. They use to only sell to phone distributor to be included in the stock rom and i think they are still doing it. I got mine 3.23 because it comes with touch x custom rom last time.

But they do have beta testing that allow you to sign up and download latest beta to use. But the catch, you need to uninstall your current version and beta swype will expire. Not really and issue for those of us that are rooted but will be tedious for those on unrooted stock rom.

In fact if your rooted with cwm i can pass you a cwm flashable zip for 3.23 version.

Nothing much you can do if it hangs except hold the power button until it shutdown and restarts. Just take note what you were doing when it hang, what app was running, what app was recently installed, etc.