How to get numpad out of "mouse emulation" mode?

Or you can press SHIFT+NUMLOCK

From the menu, use

System > Preferences > Keyboard

On the tab titled "Mouse Keys" there is a check box to toggle "Pointer can be controlled using the keypad" .

You can disable this behaviour there.

You can permanently disable this incredibly annoying keybinding by editing /usr/share/X11/xkb/compat/complete in superuser mode (ie, gksudo gedit /usr/share/X11/xkb/compat/complete) and commenting out mousekeys & accessx(full):

// $XKeyboardConfig$
// $Xorg: complete,v 1.3 2000/08/17 19:54:34 cpqbld Exp $
default xkb_compatibility "complete" {
include "basic"
augment "iso9995"
//augment "mousekeys"
//augment "accessx(full)"
augment "misc"
augment "xfree86"
augment "level5"
};