OK, you're using a wheel mouse? The problem is most likely that the first device listed, "Configured Mouse" is the identifier for a two-button mouse that does not exist (most likely also because the device /dev/psaux does not exist either).
Remove that setting (or comment it out with a "#" and just leave the "Generic Mouse", which should be your actual wheel mouse, from the settings), so that the server layout looks like this:
Identifier "Default Layout"
Screen "Default Screen"
InputDevice "Generic Keyboard"
InputDevice "Generic Mouse"
Restart your X server and your mouse should be found. You could also look in /dev/input/mice to confirm that this device exists before changing the settings.... and I don't see why you would need to have "Emulate 3 buttons" set to on, since ImPS/2 and ZAxisMapping used together enable the wheel (which is the third button if pressed instead of scrolled).
Hope this helps.