OK, I now no longer have space, arrow key, backspace/enter key problems at all, however as I said before, for some reason after typing, 2-3 characters remain bold or underlined afterward. Here's my new proc:
Code:
LRESULT CALLBACK RichProc(HWND hwnd,UINT msg,WPARAM wp,LPARAM lp)
{
   switch(msg)
   {
     {		
    case WM_KEYDOWN:
		  if(wp == VK_CONTROL) {
			  cd++;
		  }
	 break;
  case WM_KEYUP:
	   if(wp == 0x42 && cd !=0) {
		   if(!bc) {
		         CHARFORMAT2 cfm;
                    cfm.cbSize = sizeof(cfm);
					SendMessage( hwnd, EM_GETCHARFORMAT,
                    (WPARAM)SCF_SELECTION, (LPARAM)&cfm );
                     cfm.dwMask = CFM_PROTECTED | CFM_BOLD;
                     cfm.dwEffects = CFE_BOLD;

                    SendMessage( hwnd, EM_SETCHARFORMAT,
                   (WPARAM)SCF_SELECTION, (LPARAM)&cfm );
					bc++;
					cd--;
			  }

		   else if(bc != 0) {
		      	  CHARFORMAT2 cfm;
                    cfm.cbSize = sizeof(cfm);
                     cfm.dwMask = CFM_PROTECTED;
                    SendMessage( hwnd, EM_SETCHARFORMAT,
                   (WPARAM)SCF_SELECTION, (LPARAM)&cfm );
					bc--;
					cd--;
			  }
	   }
	  else if(wp == 0x55 && cd !=0) {
		  if(!uc) {
	               CHARFORMAT2 cfm;
                    cfm.cbSize = sizeof(cfm);
					SendMessage( hwnd, EM_GETCHARFORMAT,
                    (WPARAM)SCF_SELECTION, (LPARAM)&cfm );
                     cfm.dwMask = CFM_UNDERLINE;
                     cfm.dwEffects = CFE_UNDERLINE;

                    SendMessage( hwnd, EM_SETCHARFORMAT,
                   (WPARAM)SCF_SELECTION, (LPARAM)&cfm );
					uc++;
					cd--;
			   }
		   else if(uc != 0) {
		      	  CHARFORMAT2 cfm;
                    cfm.cbSize = sizeof(cfm);
                     cfm.dwMask = CFM_PROTECTED;
                    SendMessage( hwnd, EM_SETCHARFORMAT,
                   (WPARAM)SCF_SELECTION, (LPARAM)&cfm );
					uc--;
					cd--;
			  }
	  }
         break;
	  case WM_DESTROY:
          SubclassWindow(hwnd,NULL);
		  PostMessage(hwnd,WM_DESTROY,0,0);
		  break;
			}
			int blah = Search(hwnd);
           return CallWindowProc(AllProcs[blah].procold,hwnd,msg,wp,lp);
	 }
   int blah = Search(hwnd);
     return CallWindowProc(AllProcs[blah].procold,hwnd,msg,wp,lp);
}

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