I tried Rio terminal on Windows and I got the same issue: pressing WASD/arrows did nothing except in menus.
I have a fix, will come in version 0.1.16 and I'm quite sure it will solve your issue as well.
Until then, I suggest you use Windows Terminal (just called "Terminal" in Microsoft Store) to run the game, because it does not have this input issue. Some other terminals use a legacy input system (quickly sending fire and release events when a key was held) that the game couldn't handle

