When I am using GIMP, I open a text layer and when I type something my outer dotted lines go away. What do I need to do to fix this?

Here is what I mean!

While on text layer: http://screensnapr.com/u/i/9it8g9.png

When on a BG layer or non text layer: http://screensnapr.com/u/i/s7psr8.png

Any help would be much appreciated as this is so annoying! Makes me not want to mess with GIMP!

Look like you need to right click on your layer in layer dialog and click layer to image size. That transparent layer below it is probably empty so you can delete that.
Sometimes the square bracket stays there until you click another tool then it will go away.....try clicking the move tool

That happens for me, too. There's nothing wrong with your Gimp. If you click back in the Text layer the dotted lines are there again.

The dotted lines tell you what the layer boundary is of the layer you're on. When you go to another layer it will show the layer boundary of that particular layer. In your case, the layer boundary of the layer below the text layer is showing in your second image as a dotted lined rectangle the size of your whole image.

I wouldn't right click and click layer to image size unless there is a need for it. You can't edit your text layer after you do that.