I've added an example in the file download section under widgets. There are two ships, one with the code that you have looked at and the 2nd with the code for multiplying the diagonals by 0.707.
You can't just add the multiply by 0.707 directly because then there would be two events happening at the same time when you push the up and right buttons at the same time. One line of code would say do right and another would say do up and right.
So the code gets more complicated - when you push a single button you have to negate the pushing of the other buttons at the same time.
You can see the code - its in the behavioirs inside of the active object. You can find it at: