Thanks all for the recent replies.
I have a Commodore rev 2B board from 1994 but it's the same behaviour on my mate's 1992 A1200 too (he doesn't know the board rev.). I've returned the adapter to Amigakit now.
@3246251196 I knew about other adapter issues but hoped the Amigakit one overcame them esp. with it being for HID USB mice, not just PS/2 mice. I'd done some checks based on what I found online including bridging the resistor to the mouse port and nothing made any difference. Chris at Amigakit suggested it's the mice tested (at least 6 across the two different machines) and/or the resistor issue.
@Acill I'm in the UK and have looked at a re-capping service but my board looks OK at the moment.
My current mouse is holding out for now (broken wire near the plug end causes up/down to fail occasionally) and I'm looking at other USB options.