Windows build number:
Platform ServicePack Version VersionString
-------- ----------- ------- -------------
Win32NT 10.0.18362.0 Microsoft Windows NT 10.0.18362.0
Windows Terminal version (if applicable): 0.5.2762.0
Any other software?
GNU nano (windows port, installed from chocolatey.)
Run GNU nano.
Cursor is aligned with where the text is appearing, follows after a newline, etc. (screenshot of conhost)

Cursor doesn't follow after a newline, and doesn't stay aligned to the insert point.

Probably the same as #2642 and #3093.
Confirmed in the wrong place. Also one cannot move the cursor about with the arrow keys.

If I SSH to a linux machine and use nano there, everything is fine. It appears to only affect win32 nano, which works fine in a normal Powershell window

Honestly, this looks like GOW nano, which has made some eminently questionable decisions regarding how the Windows Console works. The arrow keys don't even work..?
Technically, this is a conpty issue, but I cannot figure out how it ended up so bad.
the arrow keys work for me in my copy of nano. @PromoFaux may need to give more information on their part about that.
When pressing the arrow keys, the cursor does not move around, I just get [Unknown Command] at the bottom of the screen. using nano 2.5.3 installed via Chocolatey, using Terminal 0.6.2951.0
Works fine in a "normal" command prompt terminal, or powershell terminal
oh wait-- you're right. the arrow keys don't work. sorry.
I found the same issue.
"nano" installed via scoop (scoop.sh), which specifically comes from https://github.com/ScoopInstaller/Main/blob/master/bucket/nano.json or currently https://files.lhmouse.com/nano-win/nano-win_8303_v4.5-103-gb12aeeac.7z cannot move visible cursor. Although the cursor is moved internally because you would start typing at the new position.
No problem with "external" PowerShell.
OTOH it seems a bit strange that "nano" from GitForWindows does not show this behaviour - cursor works fine. Both versions being 4.5.
Most helpful comment
When pressing the arrow keys, the cursor does not move around, I just get
[Unknown Command]at the bottom of the screen. using nano 2.5.3 installed via Chocolatey, using Terminal 0.6.2951.0Works fine in a "normal" command prompt terminal, or powershell terminal