Well I've tried tampering with the Caps lock, scroll lock, and num lock to no avail.
It couldn't be that the key is busted, because as I've said, I've swapped it around to the P key (which obviously still works as I just typed P
) and to the Spacebar.
However just to see, I went into Company of Heroes (which has the same setup for pausing, the "pause break" key), and it still works in that game. So something within the game itself is borked, it's not on my end.