Keys won't work when resting hands on palmrest

I have a mid-2007 black macbook that has been flawless since I bought it in 9/2007. I usually have it setup with an external monitor, bt keyboard and mouse, and the macbook on a stand. Recently I tried typing on the macbook itself and noticed that the keys weren't being typed out while typing on the keyboard, then when i released pressure from the palm area all the letters would appear. Also, the trackpad button does not work very well with my hands on the palm rest, there is no "click". Is this normal for my macbook or should I get it serviced at an apple store? I still have applecare until 9/10.

+I've had a swollen battery issue for over a year so apple saying that this is normal and to buy another new battery for $129 is unacceptable. I'm never buying applecare again.+
Why would you wait for over a year to address a problem? Batteries are covered during the first year, but just like other wear & tear items, they are not covered forever. You expect the battery, tires, etc. in a car to be covered for the entire car warranty period? They are specifically excluded.

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