Yes, I think the Scale setting is wrong. Here's how to fix it.
1 -- In File menu > Document Properties > Page tab, change the Display Units (the very first setting at the top of the page) to px
2 -- About halfway down the page, you may notice that the Scale setting changes when you do that. That's ok, it's supposed to. But now change it to 1.0 and press Enter
3 -- Go back to Display Units and set for mm
The Scale setting again will change, but it will change to the correct value. After this, if you change the units, don't touch the Scale. It will automatically change as it needs to, to keep the document units correct.
Let us know if that fixes the problem with the step distance for arrow keys. I think it should.
Starting with version 0.92, Inkscape is using mm by default, and that's why the Scale setting is needed at all. I hope we can convince developers to go back to px for default units, as it was before. Then, no confusing Scale setting would be needed. (Personally I think it was unfair to have something so vital to users' workflow changed, without any input from users. But that's just my opinion.)
