Do you have either the "CorePointer" or "SendCoreEvents" options enabled for the device in your ServerLayout section?
Code:
Section "ServerLayout"
Identifier "Default Layout"
Screen "Default Screen"
InputDevice "Keyboard1" "CoreKeyboard"
InputDevice "Mouse1" "SendCoreEvents"
EndSection
You can also try using the evdev driver. evdev is a relatively new "all-in-one" device driver that does away with most of the xorg.conf configuration options needed with other drivers. It should be as simple as:
Code:
Section "InputDevice"
Identifier "Mouse1"
Driver "evdev"
Option "Device" "/dev/mice"
EndSection
None of the other config options should be necessary, and probably won't even work anyway. If your device has extra multimedia buttons or other fancy input functions, switch the device to "/dev/input/event*"; where "event*" is the event number shown in the "handlers" line for your mouse in "cat /proc/bus/input/devices".
xorg is in the process of developing a true device hotplugging system that uses hal and dbus, and in time you won't be configuring these things through xorg.conf, but through hal policy files. I've been playing with it and it's kind of working now, but it's a bit buggy still and not enabled by default in most systems. Give it another year though.