Hiya!
Right now you have symptoms with the mouse. So focus on that alone. Unplug everything from the 500. RAM expansion, HD and what have you. Boot on a plain diskette 'loadwb' environement with no fuss and basic config and check how the mouse is doing. If it's doing the same, you either have a mouse problem, or a motherboard problem. Get a new mouse and confirm.
If the mouse acts ok then start adding pieces one by one until you finally identify the culprit for sure.
If it's a mouse problem.. instead of getting a new mouse you should first try to fiddle inside the mouse see if it's just a misaligned or bent led/sensor, unsoldered wire or good old dust n' crap.
