Watashiwaotaku said this, but I think you misunderstood him.
Add the command prompt type xf86config
that will generate the config file automatically by asking you questions about your setup (you need to run this as root).
If that doesn't work for some reason, or you would rather not bother, you can manually edit the file XF86Config or XF86Config-4, depending on which one you have. This file is usually in /etc/X11 or /usr/X11R6/etc/X11.
Find the line in XF86Config(-4) that says something such as:
Option "Protocol" "PS/2"
Change that "PS/2" to "auto", and see if that works.
If that generates an error, than you have to manually specify the protocol for your mouse. Most 2-button mice work with "Microsoft". If that doesn't work, try out this page:
One more thing, if you try to run kde or gnome or something on a 166, you'll want to kill yourself. I would recommend IceWM, which loads pretty quick, but is still easy to use if you're really used to windows.