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Weird. I don't have a problem binding the keys, that still works for me. I get the message "You must assign keys to all commands first." only when I leave a key with no keybind, i.e. when any key says "--------" in red. The two at the bottom saying "NotUsed" in red does not affect my ability to bind keys.

There is another issue however, which is that the WASD keys are used for movement and not unbound, even if you bind movement to other buttons. The same problem exists for the Escape key. The chat key does not work to rebind either.

Could you please attach images of your controls screen when you are trying to rebind but cannot? So I can see how it looks for you and what keys you are trying to bind and I will try helping you guys out.
 
I think I found why you cannot bind the keys.

You will not be able to bind hotkeys if you try binding any of the buttons W, A, S, D or Esc to any of the following functions: Pause, In-Game Chat, Evasion, Weapon Skill, Potion Skill, Use/Grab/Revive, Attack or Class Skill.

The solution is to NOT use WASD or Esc for any hotkey binds.
 
You just have to swap A and Q together + Z and W together. That's all :p
(and put all movement in a QSDZ form (which is known as a AWSD form for others keyboards)

You should be able to bind movement to just those control but it wouldn't work well since S will still move the character down as well and D would move him to the right. And binding any of the WASD keys for any function makes you unable to save your key bindings.

By the way, thanks for reporting the possess monsters movement issue, I forwarded that to the developers as well. The controls for possession are not changed even if you change hotkeys.