I am quite certain that the key combination has been working before.
Xfce is being used on a remotely connected server, which I connect to with NX Client for Windows. My colleague connects to another server with Xfce 4.4.x and the key combination does work for him. I have however tried to login to that server and I get the same problem.
It does not affect a single application but the whole Xfce. I tried it in a shell (Bash and tcsh) and emacs and none of them work. When I suspected that the whole environment is affected, I created an application shortcut in Settings->Settings Manager->Keyboard. It refuses to detect Alt-Backspace. Ctrl-Backspace, e.g., works however fine.
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