Do games requiring text input - output the text to screen correctly? If so, it's most probably some whacky Workbench preferences that need setting back to default.
Are you booting directly from Deluxe Paint - or loading from Workbench when you get the garbled text? If you're booting directly from Deluxe Paint then it's most likely a hardware fault. I'm not sure, but a faulty Denise may cause this kind of problem.
Might also be worth inspecting the keyboard to see if there's a key stuck down that would cause the keyboard to output alternative characters.
Also check the keyboard connections on the motherboard - perhaps a dodgy connection could be the problem.
Does the capslock LED flash at all?