I have made some progress in my learning what is going on so here is an update.

The reason the mouse does not work on post install boot(even though it is present during install and even tests good duing install) is that install is not assigning interrupt to mouse. This is evidenced by vim /proc/interrupt. Now, what do I do? I tried to edit the file and add interrupt 12 to mouse but the file is read only and chmod does not seem to change it to write permission.
other problem. Install sets up resolution on graphics card to high and card runs out of memory, therefore the X does not run right if at all. Where and how can I change it to 256 colors instead of 16 million. I did once get install to do that right but now lost it again.