When entering text, it's probably not good to reset the cursor to the beginning of the list.  

Better to leave it near the last letter, as Squeezebox does.  The challenge here is to insert a virtual cursor between letters.  Dave Nanian writes:

Upper case letter shifts to same location in lower case alphabet otherwise, lower case remains on letter

Between letter groups is the "enter and continue" symbol


So, as you scroll to D "D" the vertical letter list should look like this:



B
C
D
E
F


Then press enter, you'd get:

 c
 d
D>
 e
 f

then choosing 'e':

  d
  e
De>
  f
  g

etc...