Can anyone explain to me how I fix this? I've tried adding a shift modifier in dosbox keymapper to the = key in hopes that it would register as a + keystroke but it does not. Not to mention adding a shift modifier to ` so it registers as ~. This affects gameplay greatly as you are supposed to use ~ to cut engines to pull yourself out of an engine stall.

What exactly am I doing wrong here?

I used to have this problem.

The problem's not just limited to DOSbox. Windows is confusing some of the keys on your keyboard with Media Center devices, which causes some keys in most SDL-related programs (DOSbox, IL-2 Sturmovik, etc.) to not work properly. If you don't use remote controls or Media Center related features on your keyboard, uninstalling them should fix the problem.

More info here:

http://vogons.zetafleet.com/viewtopic.php?t=24072