When did this start happening? All of a sudden like, or has it been a recurring problem from the start? Had you added any hardware just prior to this?
Another possibility, though probably a remote one, might be that the motherboard is on its last legs, or as handy mentioned, the mouse port itself may be defective. You can test the latter by following astro’s suggestion and trying a USB mouse.
Hmmm… just checked the IRQ’s and the PS2 is on 12 by itself, but the Video card is on 11 along with my NIC which is used for the cable modem. Those are 2 pretty big devices sharing one IRQ…
If anyone who took the time to answer would like to know, the problem was indeed IRQ’s. I uninstalled the NIC and moved it as far from the Video card as possible and reinstalled and it chose a different IRQ and I have had NO problems since!! 
Thanks to everyone that helped, its appreciated! 
Glad you found your solution. The one thing I do when working on a computer is make sure that the video card and net card never share an interupt with another device. I try for no shared interupts, if possible.
The Logitech Optical Mouse is great. You can use it USB or PS2. It’s a larger well fitting mouse for someone with big hands.
Remember, don’t plug in your PS2 mouse while the system is on. You’ll end up with fried mouse.
Due to a Windows quirk you should never install a NIC in the PCI slot closest to an AGP video card, it will cause random lock ups and freezes. I don’t know if its the way the motherboards share resources or the cards themselves that are at fault but it is a known issue. Also some less expensive network cards will only work properly if they are set to an IRQ of 9…which a lot of video cards have, this will usually cause a conflict if you are still using an S3 video card…they seem to be like a five year old on a bad day, they don’t share well. 
Keith