The game would not arbitrarily switch to Mode 2. There are two reasons why a switch might happen.
1) You have the "Auto select mode at start of flight" option checked in the "Map Controllers" section, the game will switch to "Mode 2" when you enter a GV, then switch to "Mode 1" when you enter a plane. If you do not want this to happen, then uncheck the above option.
If nothing has been mapped in "Mode 2" of the "Map Controllers" panel, then all of a sudden, nothing will work.
2) You have mapped the "Switch to Mode 2" command to either a button on the stick or on the keyboard and accidently pressed it.
Loss of mappings could be caused by an anti-virus program. There is also a spyware/malware program on the loose on the Internet which can cause files to be set in a way they cannot be written by the game. Once this happens, none of the configuration information will be retained.
Easy to spot this one, as all the files and folders in the HTC installation directory will be marked read-only and they cannot be changed by you. Removing the game and re-installing it will fix the problem temporarily, but it will reoccur until you find the spyware/malware program and purge it from your computer.